The probe into Rio Tinto, which led to the arrest of Stern Hu, an Australian citizen, alongside three of his Chinese colleagues, should be wrapped up by next Monday, according to the government.
The four men were arrested last July. They were initially accused of espionage and bribery in order to manipulate how much China pays for its iron ore, the raw material for steel-making. The accusation of stealing state secrets, however, was quickly dropped.
Monday will be the conclusion of the investigation, but the men could be quite legitimately detained for some time yet. The files will be passed to a prosecutor, who has to determine whether there is a case to answer or not.
At the time, many observers connected the arrest of the men to Rio Tinto’s stubborn negotiations over the 2009 contract for iron ore. The China Iron and Steel Association (CISA) had demanded more than a 30% cut on the price of iron ore for Chinese companies, after Japan agreed to a 30% discount. The big four mining companies, however, stood firm, and no deal was ever reached.
In effect, Chinese companies have accepted the Japanese deal and have been paying at the 30% discount level.
The next contract is due to kick off in April, since when the price of iron ore on the spot market has been driven up by 80%. The negotiations between China and the miners began in October but so far have not even found a price range that can be agreed on.
The Chinese side is keen to actually do a deal this year, and with prices rising, there’s a theoretical chance that they will try to do it quickly. The mining companies are apparently suggesting a 30% rise over last year’s Japanese contract price as a starting point for negotiations.
All of that leaves Mr Hu and his men in a bit of limbo. If you believe that they are a negotiating chip between China and Rio, then they are unlikely to be released until April at the earliest. If no deal is reached, they could sit in a Chinese jail for even longer.