China says Rio Tinto bribed mill bosses over iron ore talks

A prominent state-run Chinese newspaper says Rio Tinto bribed executives from all 16 of China's major steel mills.

Rio targeted key executives for Chinese firms who negotiate iron ore prices with large foreign suppliers, the China Daily reported in a front-page article.

The English-language newspaper, which is often used by the Government to deliver a message to a foreign audience, cited one unnamed industry insider.

Rio declined to comment on the allegations.

Australian Stern Hu, an executive for Rio Tinto, and the others were detained July 5 amid contentious iron ore price talks with Chinese steel mills. State media say they are accused of bribing Chinese steel company employees to obtain confidential information on China's negotiating position in the talks.

Australia is taking all measures possible to ensure the well-being of Hu, Prime Minister Kevin Rudd said yesterday.

Foreign Minister Stephen Smith will meet a Chinese vice-foreign minister in Egypt to discuss the detention of Hu, Rudd said.

The detentions complicated price talks between China and iron ore suppliers and raised concerns of a disruption in the industry, as China is quickly becoming the main global consumer of iron ore.

This year's price talks between China and iron ore producers began in January, and passed the June 30 deadline without an agreement, becoming the longest-running in the 40-year history of setting annual prices for the steelmaking material.

But yesterday Chinese steelmakers accepted a temporary 33 per cent iron ore price cut from London-based Rio Tinto, the world's second-largest producer, and may allow annual contract talks to lapse, Umetal Research Institute said. The 33 per cent cut is the first drop in prices in seven years.

The China Iron and Steel Association, leading the talks, sought a discount of as much as 45 per cent after its mills posted losses, more than the 33 per cent cut agreed by Japanese and Korean steelmakers.

- AGENCIES