China says Rio Tinto staff hurt interests

By Benjamin Kang Lim and Rob Taylor

BEIJING/SYDNEY (Reuters) - China said on Thursday detained staff from Australian miner Rio Tinto had harmed China's economic interests in a case that has rattled currency markets and raised questions about China-Australia relations.

Beijing confirmed on Thursday the detention of an Australian mining executive and three other Shanghai-based employees of global miner Rio Tinto.

Chinese authorities have "a vast amount of irrefutable evidence" which showed the four "pried and stole Chinese state secrets for overseas, gravely harming China's economic interests and economic security," Foreign Ministry spokesman Qin Gang said.

He said it was an "independent judicial case ... and should not be gradually enlarged or politicized." Doing the latter "would also be detrimental to Australia," he added.

The head of the iron ore department with the foreign trade and investment unit of state-owned Chinese steel company Shougang Group has also been detained, newspaper reports and a Chinese steel industry executive said on Thursday.

Reports of the Rio Tinto detentions had already emerged from Australian sources in recent days, with investors concerned the affair could hurt Australia's ties with its biggest trade partner.

It could also increase concerns about doing business in China generally, as sources told Reuters that computers, likely containing sensitive commercial information relating to iron ore contracts, have also been removed from Rio's Shanghai offices.

"This really does highlight, possibly more than any other case in recent years, the potential vulnerability to the law (in China) being interpreted very flexibly, and the huge grey area especially around information and what constitutes a state secret," said Andrew Gilholm, Control Risks' senior analyst for China and Northeast Asia.