Anglo-Australian mining giant Rio Tinto said yesterday that it had suspended iron ore price negotiations with China following the arrest of executive Stern Hu (胡士泰) and three of his colleagues.
“At this point in time we’re not negotiating,” iron ore chief executive Sam Walsh told reporters.
Hu’s arrest during fraught negotiations over benchmark prices for iron ore sparked diplomatic tensions between key trading partners Australia and China, and prompted widespread concern in the business community.
Walsh said he expected talks to resume, but was unsure when.
“Remember that we have our negotiators detained,” he said.
Rio was in the meantime shipping iron ore to China on a “provisional” price based on the benchmark the company settled earlier this year with Japan, Walsh told reporters in Perth, Australia.
Rio, the world’s second-largest producer of iron ore, has long been a backer of the decades-old benchmark system, under which the first price agreed between a miner and steelmaker becomes an industry standard for the next 12 months.
Rio chief executive Tom Albanese warned last month, however, that the benchmark system had to evolve “or it will break.”
The arrest of Hu — Rio’s lead negotiator in the stalled benchmark talks — on allegations of spying and bribery, was seen by some as a sign of China’s frustrations with the talks.
China’s Iron and Steel Association, which is leading iron ore price talks with Rio and other producers on behalf of Chinese steel mills, offered little comment on Walsh’s claim.
“We have no new information to release,” an association spokeswoman said.
Walsh said Hu’s case had moved onto the legal stage and Rio was “respecting the judicial system.”
“We’re pleased that our four employees have been able to hire top-notch lawyers who will represent them,” Walsh said. “We’re supporting, but standing back from that process and allowing the judicial system to take effect.”
China this week sought to ease fear over Hu’s arrest after a European business group said firms were concerned their employees could unwittingly face similar probes.
“The Chinese government is dealing with the case according to law to ... create a sound and fair commercial environment which is in the long-term interest of foreign companies in China,” Chinese Foreign Ministry spokeswoman Jiang Yu (姜瑜) told reporters.
Hu and three Chinese colleagues were detained in Shanghai in July. The group has now been formally arrested and the charges downgraded. They stand accused of industrial espionage and bribery during the protracted iron ore talks.
The EU Chamber of Commerce in China on Wednesday called on Beijing to better define its “national interests” following the case, amid concerns European businesspeople could unwittingly fall afoul of the authorities. Australian Foreign Minister Stephen Smith said on Thursday that consular officials were due to have a third access visit with Hu “in a matter of days.”
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