China has formally arrested four executives of mining giant Rio Tinto on spying charges, according to state media.

The Xinhua News Agency reported the first official confirmation of the case on Thursday, saying the four employees - three Chinese executives and one Australian were detained on suspicion of espionage and stealing state secrets.

All are reportedly members of Rio Tinto's iron ore sales team based in Shanghai.

Their arrest comes amid contentious talks over the price of ore sales to China.

China's foreign ministry on Thursday rejected Australian speculation that the arrests were retaliation for Rio's decision last month to cancel an investment deal with a Chinese state-owned company.

According to the 21st Century Business Herald newspaper a Chinese steel executive who had "close contact" with Stern Hu, the detained Australian national, had also been detained by police in Beijing.

Tense relations

Stephen Smith, the Australian foreign minister, described the spying accusations as "very surprising" and said diplomats were seeking access to Hu.

China is Australia's second-largest export customer behind Japan, buying $28bn of mostly commodities such as iron ore in the 11 months ended May 2009.

In 2008, more than half of China's imports from Australia were of iron ore.

The detentions follow a period of tense relations between the trading partners, with iron ore negotiations running past the June 30 deadline and Rio Tinto abandoning a planned $19.5bn investment by Chinalco, a state-owned Chinese metals firm last month.

Smith said he saw "no basis" for speculation of a so-called "business feud payback" behind the detentions, but Barnaby Joyce, an Australian conservative opposition politician who opposed the Chinalco bid told Reuters news agency that he had no doubt of a link.

"Chinalco's failure to buy 18 per cent ownership of Rio would appear to have inspired Mr Hu's arrest and that of three other Rio workers," he said.