http://www.bloomberg.com/apps/news?pid=20601087&sid=aygM4ViTghXc Rio Tinto Employees Held in China Amid Stalled Iron Ore Talks Share | Email | Print | A A A By Jesse Riseborough and Brett Foley July 8 (Bloomberg) -- Rio Tinto Group, the worldâs second- biggest iron ore exporter, has four employees detained in China amid a deadlock in annual price talks for the ore. Rio hasnât had contact with the workers from the Shanghai office since they were detained July 5, spokesman Nick Cobban said yesterday by phone from London. The Sydney Morning Herald identified one of them as Stern Hu, an Australian passport holder and head of Rioâs iron ore operations in China. Chinese steel mills are seeking a bigger price cut than the 33 percent agreed on in May between London-based Rio and Japanese, Korean and Taiwan producers, Hebei Iron & Steel Group Vice President Tian Zhiping said on July 2. Rio was criticized in China after it rejected a planned $19.5 billion investment by Aluminum Corp. of China in favor of a share sale and an iron ore joint venture with BHP Billiton Ltd. China is âplaying a bit of a dangerous game,â Ric Ronge, who helps manage the equivalent of $1 billion at Pengana Capital Ltd. in Melbourne, said today. âThe fact of the matter is China needs the material and Rio needs to sell the material.â The reasons for the detention are unclear, according to an internal e-mail obtained by Bloomberg sent yesterday by Sam Walsh, the chief executive of Rioâs iron ore operations. Australian officials are seeking âurgent accessâ to one of the detainees, Miles Armitage, a spokesman for Australiaâs Department of Foreign Affairs and Trade said in an e-mailed statement. Embassy officials have been in contact with the manâs family, Armitage said. The other three people are Chinese passport holders, according to the Herald. Rio dropped 1.4 percent to A$46.69 at 11:31 a.m. in Sydney trading, compared with a 1.1 percent drop in the benchmark S&P/ASX 200 Index. Price Talks London-based Rio is among iron ore producers negotiating contracts with Chinaâs steel industry, the biggest buyer of the raw material. Calls to the China Iron & Steel Association in Beijing werenât immediately returned. âWe intend to co-operate fully with any investigation the Chinese authorities may wish to undertake and have sought clarification on what has occurred,â Walsh said in e-mail. âWe are concerned about our peopleâs wellbeing and are doing everything we can to help them and support their families.â Rio said last month that some iron ore supply contracts may revert to so-called spot pricing, or market rates for immediate delivery, from June 30 if thereâs no agreement contracts. Fixed- price iron ore contracts cover the fiscal year starting April 1. The decline in contract prices is the first in seven years. Bad Development âThe iron ore negotiations with the Chinese have taken a new direction,â Charlie Aitken, executive director of Southern Cross Equities Ltd., said today in an e-mailed note to clients. âThis arrest, or whatever it is, of Rio employees is a very bad development however you look at it.â Rioâs decision to scrap the deal with state-owned Aluminum Corp., the companyâs largest shareholder, after commodity prices improved was an act of âkicking down the ladder,â according to a commentary in state-run Xinhua News Agency. BHP Billiton spokesman Peter Ogden declined to comment. Fernando Thompson, a Rio de Janeiro-based spokesman for Brazilâs Vale SA, the worldâs largest iron ore producer, also declined to comment. To contact the reporters on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net; Brett Foley in London at bfoley8@bloomberg.net Last Updated: July 7, 2009 21:59 EDT