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Rio Tinto says looking to grow China relationship

Australia warns China not to interfere in iron ore prices
Sydney (AFP) Feb 13, 2010 - Australia has warned Beijing not to interfere in difficult commercial iron ore price negotiations and urged China to act as a market economy. "We've been consistent in this regard. Negotiations are for the market. We will not interfere in the market," Trade Minister Simon Crean said in an interview late Friday. "We've made the point to China 'We have recognised you as a market economy, act as one, don't seek intervention from the government when it comes to market exchanges'," he said according to the transcript issued by his office. Crean was responding to local media reports that a senior official from China's industry ministry had met with an Australian embassy official to press the point that China paid the highest prices for iron ore, despite being the world's largest customer. The trade minister said "all sorts of conversations take place" on a government-to-government level, but iron ore pricing was not one that was regularly discussed.

"We are reminded of the size of their market but that's an important dimension of our trade relationship anyway," added Crean. China's Iron and Steel Association in December said it would seek to streamline the number of importers and their prices in a bid to boost China's leverage as global miners sought a 20-30 percent price hike in what were proving "quite difficult" 2010 benchmark talks. China's relations with the world's biggest miners -- Anglo-Australian companies BHP Billiton and Rio Tinto and Brazil's Vale -- remain tainted by the July arrest of Rio executive Stern Hu and three Chinese colleagues in Shanghai. Their detention came during fractious iron ore contract talks which later lapsed and just weeks after Rio Tinto snubbed a near 20-billion US dollar cash injection from a state-run Chinese company.

Crean emphasised that Canberra had not sought to have the case dropped against Hu, an Australian passport-holder, and would not investigate Rio as a result of his formal indictment Thursday on charges of bribery and illegally obtaining trade secrets. "We recognise the Chinese legal system has to run its course, it's a different legal system to ours," said Crean. "That's the circumstances in which people go in there to do business or travel in there. "We've treated it as a consular case, not seeking to interfere with the course of justice, only to bring it to a conclusion expeditiously and transparently," he added. There were "no allegations" against Rio, he said, and therefore "no justification or reason on the evidence before us" to warrant an Australian government probe of the miner's practices in China.
by Staff Writers
Sydney (AFP) Feb 14, 2010
Rio Tinto said Sunday it wanted to grow ties with China despite four employees being charged with bribery and industrial espionage, as rival BHP Billiton looked to the Asian giant to underpin growth.

Rio Tinto is increasingly looking to China for growth because of booming Chinese demand for raw materials but Beijing said last week that Rio Tinto executive and Australian passport-holder Stern Hu faces trial in Shanghai along with three Chinese colleagues on bribery and industrial espionage charges.

"We would like to build relationships with China and I think that that can take place over a number of different areas," Rio Tinto's chief financial officer Guy Elliott told Sky News.

Chinese state-owned aluminium maker Chinalco is the biggest shareholder in Rio, the world's third largest mining company.

The four Rio employees to be prosecuted were detained last July during fractious iron ore contract talks between China and the miner.

They are accused of using their "positions to obtain benefits for others and on many occasions solicited or accepted bribes," Chinese state news agency Xinhua has reported.

Rio Tinto has previously said it is not aware of any wrongdoing by its employees while the Australian government and US and European business leaders in China have called for transparency in the prosecution of the four.

The employees were arrested just weeks after Rio walked away from a massive cash injection from Chinalco, which would have given China an important presence in Australia's vast resources sector.

The case briefly snarled diplomatic ties between China and Australia, which have become major trading partners as the Asian giant seeks commodities and energy to feed its rapid industrialisation.

Elliott said improving the company's relationship with China was behind the decision to appoint Ian Bauert, who more than 25 years ago established Rio Tinto's first office in the country, as managing director for China.

"Ian Bauert is very experienced, speaks Mandarin, has spent a lot of time in China over the years and we hope very much that he, with his long experience, will very much contribute to that building of bridges," he said.

China is a key market for both BHP Billiton and Rio Tinto, among the world's top three exporters of iron ore, a crucial ingredient in steelmaking.

BHP Billiton Chief Executive Marius Kloppers, said the Hu case had been a "great concern", but added that China's human rights record had to be balanced against its achievement in lifting hundreds of millions of people out of poverty.

"Obviously the Stern Hu events of last year and continuing to this year gave us great concern," he told ABC television in comments broadcast Sunday.

"Particularly for Chinese staff who stand in front of customers every day doing the same job. And that created some anxiety, but luckily we were able to do business as usual pretty much throughout that period."

Kloppers said rapidly industrialising countries such as China would likely support growth in commodity prices, as developed economies emerged from the global slowdown more gradually.

He said that while the mining giant was cautious about the global economy -- despite last week announcing its half-year profit had more than doubled to 6.14 billion US dollars -- it was "relatively optimistic" about commodity prices.

Kloppers said his company had completed an analysis of China's ramped up steel production and was confident that "this trend is going to go on for the 20 years that we forecast."

Kloppers said that benchmark iron ore prices were on track to rise this year despite global economic concerns, thanks largely to China's continued growth.



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