Now with Beer Garden for our smoking patrons.July 11 Martin Zhou - South China Morning Post
The detention of the four employees, who worked in Rio's Shanghai office, came as the company was acting as lead negotiator for global iron ore suppliers in price talks with mainland steel producers.
The 21st Century Business Herald, citing anonymous industry sources, said the information revealed to the four included data about the average cost to the domestic steel industry of imported ore, gross profit per tonne and raw material stock turnover.
Mainland analysts said the information would give a company an advantage in the bargaining process.
"Accurate knowledge of this data, particularly the raw material stock turnover, gave firms like Rio Tinto a clear idea how far it could push the Chinese steelmakers in the negotiations," said Xu Zhongbo, the chairman of Beijing Metal Consulting.
As well as the Rio staff, Tan Yixin, a senior executive of state-owned steelmaker Shougang Group who oversaw its iron ore purchases, has reportedly been detained, and there is speculation more arrests may follow. Mainland media reported yesterday that an unknown number of executives at state-owned steelmakers in Shandong and Hebei provinces were involved.
"Yes, the detentions have not been confined to Shanghai and Beijing," said a person with knowledge of the matter.
Some observers have speculated that the action against Rio Tinto is payback for the company ditching a planned US$19.5 billion investment by state-owned metals firm Chinalco last month, a connection Chinalco, Canberra and Beijing have denied.
"Chinalco has been in contact with Rio Tinto expressing our mutual concern for the current situation with their staff," the company said yesterday. "We have also reasserted that the situation is in no way related to any commercial dealings between Rio and Chinalco."
10 July Tom Holland - South China Morning Post
Mr Hu and three of his colleagues at the Shanghai office of Anglo-Australian mining giant Rio Tinto have been detained by the State Security Bureau and charged with stealing state secrets.
Given that mainland media are reporting that an executive of Chinese steelmaker Shougang Group was also arrested for "commercial crimes", it is far more likely that the information in question concerned the state of steelmakers' order books, their operating capacity and financial health.
In China it is perfectly possible that such mundane details could be considered state secrets.
For the last six months, mainland steelmakers have been locked in tense negotiations with Rio Tinto and the world's other two big iron ore miners over contract iron ore prices for the next year.
Japanese and Korean steel mills have already accepted a 33 per cent discount to last year's price, but Chinese producers have been holding out for a bigger cut of 40 per cent.
The difference is significant. As the charts show, China's demand for iron ore imports has shot up in recent years, pushing contract prices to a record last year, just short of US$90 a tonne for Australian ores.
With the mainland likely to import almost 500 million tonnes of ore this year, the difference between a 33 per cent and a 40 per cent price reduction is worth more than US$3 billion.
With that amount of money at stake, it would hardly be surprising if Mr Hu had sought to obtain closely guarded information about steelmakers' order books to feed to Rio's negotiators.
17 July Hou Lei - China Daily
Four employees of Rio Tinto, including Stern Hu, the head of Rio's Shanghai office, were detained in Shanghai on July 5 on charges of espionage. There are reports that detailed information about Chinese steel mills was found in computers in Rio's computers in Shanghai. Executives from all 16 Chinese steel mills participating in iron ore price talks this year had been bribed by Rio Tinto employees, an industry insider was sited by China Daily on Wednesday.
On July 5, the Chinese government began an investigation into executives of domestic steel mills to see whether they illegally disclosed secrets and took bribes from Rio. A senior executive of major steel maker Shougang Group was detained July 7 in Beijing for alleged "commercial crimes" and Wednesday's media reports indicated that a high-ranking employee from another steel maker, Laigang Group, was under investigation for "providing secrets to Stern Hu".
15 July - Zhang Qi and Tong Hao - China Daily
Executives from five leading domestic steel makers and officials from the industry association are reportedly under investigation following last week's detention of four employees of Rio Tinto's China operation, including an Australian.
Rio Tinto got to know the key executives of the 16 steel mills, who have sensitive industry information, when the China Iron and Steel Association (CISA) brought them to the bargaining table," said a senior manager at a large steel company, who requested anonymity.
"And then Rio Tinto bribed them (to get access to industry data), which has become an unwritten industry practice," the source said.
"If companies didn't accept, they would have cut supplies and so the whole steel industry has been bribed."
14 July - Zhang Qi and Tong Hao - China Daily
Anshan Iron and Steel Group Corp (Ansteel) is among five major Chinese steel makers reported to be embroiled in the espionage scandal linked to Anglo-Australian miner Rio Tinto, the latest episode in a widening investigation into alleged leaks of State secrets.
"Executives from Ansteel are being investigated (in the Rio Tinto-related case)", a senior manager at a domestic steel maker told China Daily Monday, requesting anonymity.
Apart from managers at the Liaoning-based steel mill, executives from China's largest steel maker Baosteel Group Corp, as well as Laigang Group and Jigang Group, are under investigation, domestic media reported.
Officials from China Iron and Steel Association (CISA), the industry body, are also being investigated, they reported.Tan Yixin, a senior executive in charge of iron ore imports and exports at China's eighth largest steel mill, Shougang, was arrested July 7 for alleged commercial crimes.
Tan is said to be close to Australian Stern Hu, a Rio Tinto executive who is being detained by China on espionage charges.
When contacted by China Daily Monday, Shougang, Laigang, Jigang and the CISA refused to comment.
The investigations follow last week's detention of Hu and three domestic staff members.
The inquiry into Rio Tinto began before it broke off its $19.5 billion investment deal with Chinese metals firm Chinalco and before Rio Tinto formed an iron ore joint venture with rival BHP Billiton on June 5, the Sydney Morning Herald reported Monday.
Chinese media reports said that Rio Tinto and other major international ore suppliers might have bribed executives to get access to figures such as stock levels, production schedules and volumes, financial information and purchase plans -- data that is sensitive and places China at a disadvantage during price talks.
14 July - China Daily
Detailed information of Chinese steel mills was found in computers of Rio Tinto's Shanghai office, local media reported Monday.
Four employees of Australian iron ore supplier Rio Tinto were detained in Shanghai on July 5 on charges of espionage.
An insider said that Rio knew almost every detail of some Chinese steel companies, all of which signed long term sales contracts with Rio.
Information in Rio's computers includes the outputs, sales, purchasing plans, raw material stocks and schedules of production.
"Even presidents of these companies may not have such detailed information," the insider said.
Tan Yixin, a senior executive of China's major steel maker Shougang Group, was detained July 7 in Beijing for alleged "commercial crimes". Tan was in charge of the company's import and export business of iron ore.
Many employees of foreign iron ore suppliers used to work in Chinese steel mills and they knew details of the firms, according to insiders.
"Foreign iron ore suppliers also bribed executives from Chinese steel makers during holidays and festivals," an insider said.
It was informed by the local press that the inquiry into the Rio Tinto's bribery case had already started before the Chinalco - Rio Tinto deal went collapsing. It was also reported that the arrest of Stern Hu and the other Rio Tinto's employees were made along side of other local executives of the local state-owned steel maker companies which have been dealing with Rio Tinto and with Stern Hu himself in particular.
This is obviously a bribery case of a very serious level from within the state itself which lead to the arrest of all the alleged masterminds behind the whole iron ore negotiations.
What the Australian media successfully conveyed to us is that, 4 of Rio Tinto's employeed in China were detained, one with Australian passport. They were detained in suspicion to a claimed bribery case. The rest of the stories and also related case were missing from the major headlines, which is a shame, as this makes most of us very judgemental against part of the stories that were highly exaggerated.
While the local media in China were glad that this inquiry has prompt into an arrest as a meassure to crack down on the highly corrupted industry in China.
While different countries have different ways of dealing with such situation, China is no different when dealing on its own. China is well known for not releasing to the media most of the information relating to their national interest, so I am not surprised we would not be hearing from them at all for the next few months or years in relation to the Stern Hu's case no matter how threatening Australia can be. At the end of the day, everybody must go by the law of a country. Foreigners come to Australia and must abide the Australian laws, why should it be any different vice versa?
