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WRAPUP 3-Rio says seen no evidence for China detentions

Published 08/11/2009, 06:27 AM
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* Rio says not informed of any charges

* Australia rejects report of Rio overcharging, spying

* Detained Australian Hu reportedly healthy

By Rob Taylor

CANBERRA, Aug 11 (Reuters) - Anglo-Australian miner Rio Tinto said on Tuesday it had yet to be presented with any evidence to support the detention of four of its China-based staff on suspicions of stealing state secrets.

The mining giant said it had also not been informed of any charges against its detained staff, which include Rio Tinto's top iron-ore salesman in China, Australian Stern Hu.

Hu and three Chinese colleagues were detained a month ago on suspicion of spying on Chinese steel mills. Rio, the world's second-largest iron ore producer, and Anglo-Australian firm BHP Billiton,, the third-largest producer, are currently locked in iron ore price negotiations with China.

"We are still not aware of any evidence that would support their detention," said Rio's iron ore division chief Sam Walsh.

"We continue to be concerned for the health and welfare of our three other employees detained at the same time as Stern Hu," Walsh said in a statement, noting that the Australian government had informed the company that Hu was well.

The Rio detentions have cast a shadow over Australia-China trade, worth $53 billion in two-way terms in 2008.

In a growing war of words between Australia and China, Smith delivered a veiled warning on Tuesday for Beijing to rein in its diplomats after its embassy tried to block a speech in Canberra by an exiled leader of China's Uighur Muslim minority.

An online article published in a magazine run by China's state secrets agency at the weekend said Rio spied on Chinese mills for six years, resulting in the mills overpaying $102 billion for iron ore, Rio Tinto's biggest earner.

The Australian government on Tuesday brushed off the Chinese report accusing Rio of overcharging and spying on Chinese steel mills, saying it had not been officially sanctioned.

"It is now quite clear, given that the article has been taken off the website, that it was essentially the opinion of the individual writer, and not if you like officially sanctioned," Australian Foreign Minister Stephen Smith said.

Rio Tinto's shares were some 2.2 percent lower at A$57.22 at midday on Tuesday, continuing a 3 percent slide the previous day amid investors nerves over the miner's relations with China.

AUSTRALIA-CHINA TIES

Australian diplomats had made a fresh appeal for China to grant legal representation to China-born Hu after they were allowed only their second visit to his Shanghai detention centre late last week, Smith said.

"We were very pleased to see that his health and welfare continues to be in good order," Smith told state radio.

Jiang Ruqin, the author of the article that laid out the allegations, said the claim of losses came from Chinese media reports, including his statement that indications that Rio had been spying for six years came from seized computers.

"I don't have any special knowledge. I am not a steel industry insider," he told Reuters.

The website (www.baomi.org) was inaccessible on Tuesday, but the article could be found on other Chinese-language websites.

The figure of $102 billion appeared to derive from an academic assessment of how much more the steel industry has paid for iron ore since 2003, but that higher cost was more than offset by rising steel prices as China's economy grew.

David Kelly, a professor of Chinese studies at the University of Technology, Sydney, speaking in Beijing, said it was unclear how much Chinese government weight was reflected in the article.

"I would suggest that at least it reflected a powerful view of at least part of the bureaucracy," said Kelly.

In a further sign of brittle relations, the Chinese embassy's political counsellor, Liu Jing, asked management at Canberra's National Press Club last week to drop an invitation to Rebiya Kadeer to speak on Tuesday, the club said.

Kadeer is blamed by Beijing for instigating last month's ethnic riots in Xinjiang province, which left 197 people dead, mostly Han Chinese, and wounded more than 1,600.

"Embassies, diplomats, officials are entitled to put views in Australian society, but when they put those views, those views have to be put appropriately," Smith said.

(Additional reporting by Chris Buckley and Lucy Hornby in BEIJING and James Grubel in CANBERRA) (Writing by Michael Perry; Editing by Sanjeev Miglani)

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