Chinese spy probe widens; Australia wants haste

By Lucy Hornby

BEIJING (Reuters) - Chinese investigators have questioned executives at several steel mills in a widening probe of alleged leaks of state secrets to Australian iron ore supplier Rio Tinto, Chinese media said on Tuesday.

The news comes as Australian officials urged China to move quickly in dealing with the detention of a senior Australian Rio executive on spying accusations, a case that has cast a shadow over bilateral trade worth $53 billion (32 billion pounds) last year.

The broadening investigation targets some of the nation's largest mills, all influential members of the China Iron and Steel Association (CISA), which represents the Chinese industry in annual negotiations with global iron ore miners.

That could increase tensions between CISA and the steel mills, many of which are impatient with the association for so far failing to reach a new price settlement for 2009 with miners Rio, BHP Billiton and Brazil's Vale.

"This is a case involving foreign companies, and isn't a small matter. Our association cannot provide more detailed information," CISA secretary General Shan Shanghua told the 21st Century Business Herald.

"The situation isn't how many people imagine it."

Investigations have touched Baosteel Group, which used to lead negotiations, as well as Anshan Iron and Steel Group (Angang), its partner Benxi Iron and Steel Group, Shandong-based Laiwu Iron and Steel Group and Jinan Iron and Steel Group, the China Daily said.

Meanwhile, CISA and the Ministry of Commerce are reviewing iron ore import licenses to identify speculative importers, and are likely to cut about 20 licenses, most belonging to trading firms, three industry sources said.