Rio Tinto has suspended iron ore price negotiations with Chinese steel mills after the detention of its staff by the Chinese authorities.
Rio’s head of iron ore, Sam Walsh, today confirmed that the talks had been suspended in the latest development in the long-running confrontation between the Anglo-Australian mining company and its biggest customer.
Four Rio staff, including the head of iron ore negotiations, Stern Hu, an Australian of Chinese origin, were accused of spying by the Chinese authorities and detained in July.
In remarks reported in the Australian media, Mr Walsh said: “At this point we’re not negotiating. Remember, we have our negotiators detained.”
A Rio spokesman later said that the suspension of talks was not connected to the allegations of commercial espionage against Rio staff.
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The row between China and Rio erupted in the summer during an annual round of price negotiations over iron ore in which the country was seeking bigger price reductions than the mining group was prepared to accept.
Korean and Japanese mills had settled for a 33 per cent reduction on last year’s contract price but China wanted a 40 per cent cut.
The Chinese Government is thought to have been suspicious over volatile prices in the iron ore spot market and accused Rio’s staff of theft of confidential information concerning volumes and stocks from Chinese steel mills.
The arrest warrant for the four men was downgraded to bribery and stealing commercial secrets in a move that was seen as an attempt by the Chinese to defuse a diplomatic row
China’s mills are believed to be purchasing iron ore at the benchmark price agreed by Korea and Japan but no formal contract has been settled with China’s Iron and Steel Association.