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Rio Tinto staff detained

FOUR employees of the Anglo-Australian mining company Rio Tinto Group's Shanghai office were detained for questioning on Sunday, the company confirmed today.

The company said in a statement that it did not know the reason for the detention. One of the detained was Stern Hu, head of China operations at Rio's iron ore division and an Australian passport holder. The Australia Embassy is now handling the issue with the Chinese authorities, the company said.

It added that it intends to "co-operate fully with any investigation the Chinese authorities may wish to undertake" and has sought clarification on what has occurred.

However a Shanghai Public Security Bureau spokesman told Shanghai Daily today it has not detained any Rio Tinto employees.

Rio Tinto was in negotiation with Chinese steel makers over iron ore contracts for 2009 to 2010, which have not been resolved yet because of a dispute on iron ore prices.
The company, one of the world's top three iron ore producers, has agreed with Japanese and South Korean steel mills on a reduction of 33 percent from a year ago on steel raw materials in the new contract for 2009-2010 term, but China's steel industry association said it wanted a bigger cut.

Shan Shanghua, secretary general of China Iron and Steel Association, which represents all of China's steelmakers in the talks with Rio, stressed in previous reports that the price of iron ore should go back to the 2007 levels, which means a discount of at least 40 percent, as the price of steel has plummeted to 2004 levels.

Even with a discount of 40 percent - US$55 per ton - Rio still stands to make a large profit as the price free on board is only US$20 for Australian iron ore, said Shan.

Rio has withdrawn from a planned US$19.5 billion investment with China's Chinalco, a state-owned aluminum company.

China's Ministry of Industry and Information Technology previously expressed concerns over a planned joint venture between Rio Tinto and BHP Billiton, the two biggest miners in the world, as Chinese steelmakers would have little say in the price of iron ore in the international market if the plan succeeds. The venture could monopolize the world market.


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