July 16, 2009 / 10:52 PM / 11 years ago

China's Rio probe ongoing - Australia

CANBERRA (Reuters) - China has not yet reached a conclusion that four detained Rio Tinto (RIO.AX) staff accused of industrial espionage are guilty and investigations are ongoing, Australia’s Foreign Minister Stephen Smith said on Friday.

Journalists stand outside a Rio Tinto office in Shanghai July 9, 2009. REUTERS/Aly Song

Smith, who discussed the detentions with China’s Vice Minister for Foreign Affairs He Yafei at a meeting in Egypt on Thursday, said statements by an official in Beijing that the four had harmed China’s economic interests were not conclusive.

“That doesn’t sit with the meeting that I had, or the statements made to me which are that the investigation against Mr Hu, and others associated with him who are also under detention, is ongoing,” Smith told Australian state radio.

Rio Tinto has said it is not aware of any evidence to support the allegations against its staff.

Australia and China traded warnings on Thursday over the Rio employees detained for spying, as the United States urged Beijing to ensure transparency and fair treatment for staff of foreign companies.

Over a week after detaining Australian Rio executive Stern Hu and three of Chinese colleagues on allegations of stealing state secrets related to sensitive iron ore price negotiations, China’s Foreign Ministry warned Canberra against interference.

Smith said Australia understood the matter was “subject to an investigation, subject to Chinese law and Chinese potentially criminal, legal and judicial processes,” and had made that point to He during their meeting.

“An investigation is underway. He (Stern Hu) has not yet been on the receiving end of charges. If and when he is, we will deal with it at that point in time,” Smith said by telephone from Dubai.

Australia’s Mandarin-speaking Prime Minister Kevin Rudd, a former Beijing diplomat and China expert, has been criticised at home for not intervening in the case and phoning China’s president Hu Jintao.

“The Australian government response has looked extremely timid and weak and really provided zero defence of a great Australian company,” senior conservative opposition lawmaker Andrew Robb said on Friday.

Rudd, facing an election late next year, is struggling “to strike the right note with the Chinese,” senior Age newspaper political editor Michelle Grattan wrote.

“He’s been caught between advice and probably his own assessment that a cautious approach would be most effective, and the demands of public opinion, fanned by a hectoring opposition,” Grattan said.

The detentions have complicated annual negotiations on iron ore contract prices between Chinese steel mills and Australia’s top mining firms Rio and BHP Billiton (BHP.AX)BLT.L. Iron ore is used to make steel.

This year’s negotiations have been particularly fraught, since they coincided with the collapse of a deal by Chinese state-owned aluminium firm, Chinalco, to increase its stake in Rio.

China is Australia’s top trading partner, with total two-way trade worth $53 billion (32.2 billion pounds) in 2008, of which iron ore trade made up $14 billion.

Reporting by Rob Taylor; Editing by James Thornhill

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