Chinese iron ore trading under a cloud

China may have placed future iron ore trading with Australia at risk as a result of the detention of Rio Tinto executive Stern Hu.

China may have placed future iron ore trading with Australia at risk as a result of the detention of Rio Tinto executive Stern Hu, Foreign Minister Stephen Smith said.

Smith has warned China that its standing in the international business community could be hampered by the affair.

According to Chinese media reports, Rio Tinto has been seeking as much as $9 billion in compensation from Chinese steel mills for contract breaches. The reports suggest Rio had been approaching Chinese steel mills in the past month, after they allegedly reneged on promises to buy certain volumes of iron ore.

Fairfax has reported claims from Chinese sources that President Hu Jintao personally approved the security probe into Rio Tinto.

The sources said the inquiry began before the company broke off its US19.5 billion investment deal with Chinalco on 5 June.

Hu and three other Rio Tinto employees were arrested in Shanghai on Wednesday 9 July, accused of espionage.

Australian officials will continue their diplomatic efforts today.

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