Aussie miner Stern Hu a big threat to China

Mark Dodd and Matt Chambers | July 10, 2009

Article from:  The Australian

BEIJING last night claimed that detained Australian mining executive Stern Hu had caused "huge loss" to China's economic interests by stealing state secrets.

As Kevin Rudd resisted demands to personally intervene in the case, Canberra's diplomatic representatives will today gain access to Mr Hu, Rio Tinto's general manager of iron ore operations, for the first time since the Chinese-born Australian was arrested by secret police on Sunday.

The access came after China's acting ambassador in Canberra, Liang Hong, was formally summoned by the Department of Foreign Affairs and Trade to relay Australia's official concern for Mr Hu's welfare.

Speaking for the first time since the arrest, Chinese Foreign Ministry spokesman Qin Gang said: "Competent authorities have sufficient evidence to prove that they have stolen state secrets and have caused huge loss to China's economic interest and security."

As the opposition criticised the government's handling of the case, it emerged that another Chinese steel industry head, who reportedly had dealings with Mr Hu, was also detained, intensifying speculation the arrests were linked to fraught iron ore negotiations.

Tan Yixin, an iron ore chief at steelmaker Shougang, had been detained as a number of steel mills came under investigation, sources said.

China's 21st Century Business Herald said Mr Tan and Mr Hu had frequent business dealings and had been involved in iron ore price negotiations.

This year's drawn-out price negotiations went badly for the state-run China Iron and Steel Association, which was unsuccessful in its vocal campaign to force a bigger price discount than that agreed to by mills in other Asian contracts. Chinese sources said other mills were also under investigation for iron ore trading. CISA has claimed speculators have been driving up iron ore prices, and in May launched an investigation into local importers.

The three Chinese Rio staff detained with Mr Hu were reported as being manager Liu Caikui and employees Wang Yong and Ge Minqiang.

Last night, DFAT confirmed that Australian consular officials in Shanghai would get access today to Mr Hu, who was arrested by Chinese secret police on Sunday on suspicion of espionage and selling state secrets.

Opposition Leader Malcolm Turnbull called on Kevin Rudd to personally telephone Chinese President Hu Jintao and order Mr Hu's release.

But speaking in Rome, where he is attending a meeting of the G8 summit, the Prime Minister accused Mr Turnbull of "political grandstanding" and said the government was acting carefully and appropriately.

"Our consular officials have been delivering a full level of representation to the Chinese authorities in Shanghai and Beijing and in Canberra," Mr Rudd said.

"We will take further action at whatever level is necessary and at the right time in support of this Australian citizen."

Mr Turnbull said the government had been too soft and that Mr Rudd should personally intervene with a call to Mr Hu Jintao.

"Mr Rudd must get on the phone immediately to the Chinese President and demand that the Australian citizen, Mr Stern Hu, be released, be given access to Australian consular officials. The Chinese government must release Mr Hu or charge him," Mr Turnbull said.

On Wednesday, Mr Smith told the ABC he was "perplexed" by the detentions, which the federal government would continue to treat as a consular matter.

Mr Smith said he did not know whether Mr Hu had been ill-treated, or where he was being detained.

Chinalco yesterday dismissed claims that Mr Hu's detention was related to the collapse of its deal with Rio, instead launching a stinging attack on the way Rio does business.

Asked about the detentions, the vice-president of the state-owned Chinalco, Lu Youqing, told China's Securities Times that Rio had "no business credibility as a company".