Shares in global miner Rio Tinto fell today after China stepped up its spying allegations against the company, although Australia's Foreign Ministry said the latest accusations were nothing new.
Dual-listed Rio Tinto's were down 2.6 per cent at 2,359 pence in London at 1120 GMT, having closed 3.3 per cent lower at A$58.55 in Sydney.
China's state secrets agency said on its website at the weekend that Rio Tinto had spied on Chinese steel mills for six years, resulting in the mills overpaying $102 billion for iron ore, Rio Tinto's biggest earner.
Rio Tinto declined to comment on the accusations, which followed China's detention a month ago of four Rio employees in Shanghai, including Australian Stern Hu, on suspicion of stealing state secrets.
The company said last month its employees had done nothing wrong. The men remain in detention and have yet to be charged.
"The allegations referred to on the National Secrets Protection Bureau Web site are not new," a spokeswoman for Australian Foreign Minister Stephen Smith said in a statement.
"The government has always said the Stern Hu case was complex and involved serious allegations. The government has urged the Chinese authorities to deal with his case expeditiously," the spokeswoman said, adding Australia would continue to make representations to the Chinese authorities over Hu's case.
The report issued by China's National Administration for the Protection of State Secrets said Rio Tinto's commercial spying involved "winning over and buying off, prying out intelligence, ... and gaining things by deceit" over six years.
The detentions have raised concerns about doing business in China, strained ties with Australia and overshadowed 2009 iron ore price talks.
"It sets a negative precedent for the whole industry," said Nick Hatch, analyst at ING. "It raises questions for the whole mining industry in terms of supplying China."
Australia exported A$18 billion ($15 billion) worth of iron ore and concentrates to China in 2008. Australia accounted for 41 percent of China's iron ore imports last year, mainly from Rio and BHP Billiton, although other Australian companies also shipped ore.
Investors said it was hard to assess what the latest comments might mean for Rio Tinto and other iron ore exporters such as Vale or Brazil and BHP.
"It has to be a concern for anybody marketing anything into China," said Tim Barker, an analyst at BT Investment Management.
Mr Barker said China appeared to be using the spying issue to reassert control over iron ore price talks at a time when some Chinese mills have independently signed new contracts while the China Iron and Steel Association is pressing for bigger cuts than agreed by other Asian mills.
Analysts also said the amount the state secrets agency reported as being overpaid by Chinese steel mills was more than double Rio Tinto's total annual iron sales revenue of $42.6 billion over the past six years.
"It's very difficult to find any reasonableness surrounding the latest claims, given the orders of magnitude and lack of detail," said Tim Schroeders, portfolio manager of Pengana Capital's global resources fund.
"There's a little bit of nervousness about the allegations."
BHP Billiton, which is working with Rio Tinto to combine their iron ore mining operations, declined to comment on the tension between China and Rio. Spokeswoman Samantha Evans said work on the production joint venture was going ahead.
Reuters