Rio Tinto employees arrested by China amid reports of Chinese climbdown in iron-ore negociations

Rio Tinto said it has not been able to contact four of its employees who have been detained by Chinese authorities since Sunday, bringing added pressure amid crucial iron-ore talks.

Stern Hu, head of Rio’s iron-ore operations in China, and three Chinese employees were arrested by the Shanghai Public Security Bureau on Sunday on apparent suspicion of “espionage and stealing state secrets”.

However it is still unclear the exact reasons for the arrest, with local news portal CN-stocks.com reporting that “industry insiders” were speculating that the detainment might be linked to bribery charges.

In a further twist to the story, unconfirmed reports emerged in China Business News today said that China's steel mills have agreed to a 33 percent cut in iron-ore contracts for six months. This would be lower than the 40 percent China had been arguing for. Japanese, Korean and Taiwan producers have already agreed to 33 percent cuts but for a full year.

Rio’s caused a great degree of anger in China last month when it decided to scrap the planned US$19.5bn investment by Chinalco after commodity prices improved.

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