China, Australia iron ore talks 'have stopped'
Updated
The headlines may have subsided but the fate of the Australian steel executive Stern Hu continues through China's legal processes.
Stern Hu's employer, the Anglo-Australian mining firm, Rio Tinto, has confirmed that its negotiations with China on an iron ore price have stopped in part because Stern Hu and his colleagues were the negotiating team.
Presenter: Linda Mottram, Canberra correspondent
Speakers: Sam Walsh, director, iron ore division, Rio Tinto; Dr Jane Golley, senior lecturer, China economy and business, Australian National University; Professor Hugh White, director, Strategic and Defence Studies Centre, Australian National University
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MOTTRAM: This year's iron ore price negotiations between Rio Tinto and China had been difficult, especially when Japan and South Korea agreed on a benchmark higher than China was hoping for. China's enormous iron ore imports -- the slump after last year's global financial crisis notwithstanding -- mean that small variations in price can cost it Billions. It's a high stakes issue and one that became part of a wider coincidence of circumstances that eventually saw China detain four Rio Tinto employees, including Australian man, Stern Hu, two months ago, initially accusing them of stealing state secrets. Eventually, lower level commercial charges were laid. And the head of Rio Tinto's iron ore division, Sam Walsh, has made a rare comment on where the matter now stands.
WALSH: The Stern Hu case and three other colleagues that have been detained in China, that's now moved to the legal stage. We are respecting the Chinese judicial system and we're pleased that our four employees have been able to hire top notch lawyers who will represent them. So we're at point where we're into client- attorney relationships and what have you. We are supporting, but standing back from that process and allowing judicial system to take effect.
MOTTRAM: It's only the second time Mr Walsh has commented publicly on the case and he confirmed that the still incomplete iron ore price negotiations with China have stalled.
WALSH: Not at this point in time we're not negotiating, now.
QUESTION: Are they going to resume at any point?
WALSH: I expect that they will but I don't know when. Remember that we have our negotiators detained.
MOTTRAM: Though the screaming Australian headlines that accompanied the initial arrest of Stern Hu and his colleagues have died down, the question of how Australia and China have behaved in the matter in the context of a number of difficulties that have struck the relationship remains a matter of discussion.
Doctor Jane Golley works on Chinese economic development at the Australian National University. At a recent ANU seminar on the question, "Does China Play By Our Rules", Doctor Golley advocated an understanding of what both sides see as the rules. And she noted that in the difficult iron ore price negotiations this year, no less than Stern Hu himself had made an instructive observation of events that took place after rival mining giant BHP failed in a takeover bid for Rio Tinto.
GOLLEY: Now following BHP's failed takeover bid, Rio Tinto responded fairly aggressively with new marketing strategies which included diverting iron ore away from long term contracts towards spot markets where the price could be twice as high Now there are some clear economic incentives to do that, but I guess it's not surprising Chinese Iron and Steel Association and the large Chinese steel mills that had benefited from those long term contracts were furious. And Stern Hu did concede at the time that quote 'we acted in accordance with the letter of the contracts, but not spirit,' So I'd translate that for the purpose of what I'm talking about here as saying that he really did concede that he was at least bending one of our rules.
MOTTRAM: More broadly, the discussion of the rules of the relationship between Australia and China is still an active one. At the same seminar in Canberra, the head of the ANU's Strategic and Defence Studies Centre, Professor Hugh White, cautioned Australians not to see the debate as principles versus expediency, and not to be afraid to see things from China's point of view.
WHITE: If you are going to have a relationship at all, the terms of that relationship can't be dictated by us, it is going to be negotiated. And the way in which we negotiate the terms of that relationship is going to be shaped by the power relativities.
MOTTRAM: And as the Rio Tinto executives await their day in court in China, Professor White joins a number of Australian China watchers and experts in concluding that through all the recent complications -- over iron ore and failed Chinese investment plans .. over Australian strategic perceptions of China and the fraught issue of Uighur leader Rabiya Kadeer's visit to Australia -- the Australia-China relationship is robust enough to survive.
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