China arrests Rio Tinto workers

Rio Tinto office in Shanghai - 10 July 2009

Rio Tinto workers are accused of spying on China's steel industry

China has formally arrested four employees of mining firm Rio Tinto on suspicion of stealing trade secrets and taking bribes, Chinese media report.

The accused are Australian national Stern Hu and three Chinese employees of the Anglo-Australian company.

The four have been in police custody in Shanghai since early July. Rio Tinto denies any wrongdoing.

Australia has urged China to allow Mr Hu - Rio's head of iron ore operations in China - to have access to a lawyer.

"We encourage China to allow Mr Hu all the protections available under Chinese law, including access to legal representation, now that he has been formally arrested," a statement from the foreign affairs department said.

The four employees - Mr Hu and his Chinese colleagues Liu Caikui, Ge Minqiang and Wang Yong - face allegations of using "improper means" to obtain "commercial secrets" about China's steel and iron industry, said Chinese official news agency Xinhua.

However, there was no mention of stealing state secrets, which earlier reports in China had said the four would be accused of, and which carry tougher sentences.

Retaliation theory

Last month, the Australian trade minister, Simon Crean, warned that business relations with China could be damaged if the case of the detained Rio Tinto workers was not handled appropriately.

Australian opposition politicians had complained that the arrests might be in retaliation for the collapse in June of Rio's proposed deal with Chinese state-owned firm Chinalco.

Rio scrapped a $19.5bn (£11.8bn) investment by Chinalco in favour of a tie-up with fellow Anglo-Australian miner BHP Billiton. Rio Tinto is now finalising a deal with BHP to merge their iron ore operations in Western Australia.

However, Mr Crean did not believe that the two incidents were related.

China is Australia's biggest trade partner, worth $53bn in 2008. Of this, $14bn came from iron ore exports, powered by Rio Tinto and BHP Billiton.