China widens Rio Tinto 'spy' probe

Five Chinese firms questioned while Australia presses Beijing for details of arrest.

    Four Rio Tinto employees were arrested at their Shanghai office last week [Reuters]

    China's foreign ministry has said that the authorities had amassed "a vast amount of irrefutable evidence" showing the four "stole Chinese state secrets for overseas, gravely harming China's economic interests and economic security".

    Last week's arrests and the widening investigation have shaken China's steel industry just as it appeared that a recovery from a sharp downturn was beginning.

    Paul Bartholomew, a steel industry analyst based in Shanghai, told Al Jazeera the case had left the industry in a state of shock.

    The biggest concern, he said, was that "the kind of information that has previously been seen as fairly benign has suddenly become a state secret".

    "The fact that the playing field seem to keep moving is not helping."

    No answers

    Stern Hu, one of the four Rio Tinto employees arrested, is an Australian citizen and his government has pressed China for more details of the charges against him.

    On Monday the Australian government called in the Chinese ambassador for the third time in a week to press for details on why Hu was detained.

    China is the world's top steel maker and Rio Tinto is one of its top iron ore suppliers [EPA]
    "We have again pressed Chinese officials yesterday to do two things: firstly to provide us with more detailed information about the circumstances relating to Mr Hu's detention, and secondly, to urge them that this is a matter that needs to be dealt with expeditiously," Stephen Smith, Australia's foreign minister, told ABC radio on  radio on Tuesday.

    He added that no answers have been forthcoming from Chinese officials so far, besides an assurance that Hu would be treated well while in detention.

    Australian opposition politicians have criticised Kevin Rudd, the Australian prime minister, for not doing enough to intervene in the case.

    Rudd, however, has defended his actions, saying the issue required a careful approach so as not to trigger a trade crisis, but he has also stepped up pressure on Beijing for information on Hu.

    Important customer

    The case comes amid already strained relations between the two countries and it threatens to further cast a pall over trade ties.

    China is Australia's second-largest export customer behind Japan, and more than half of China's imports from Australia last year were of iron ore.

    Rio Tinto, based in London and Australia, is the world's third-largest mining company and one of China's biggest suppliers of Iron ore, one of the main ingredients for making steel.

    Last month it ditched a planned $19.5bn investment by state-owned Chinese metals firm Chinalco, and there has been speculation in Australia that the arrests may be in reprisal for the collapsed deal

    The deal with Chinalco would have been one of the largest ever foreign investments by a Chinese company.

    But Rio Tinto executives changed their mind and instead launched a tie-up with fellow Anglo-Australian miner BHP Billiton amid concern that the deal would have given China too much control over Australia's natural resources.

    SOURCE: Agencies


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