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Chinese steel mills close to 40% iron ore price rise |
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Saturday, 13 February 2010 |
 China's original ''national economic security'' objective for jailing Stern Hu has again been undermined, as breakaway Chinese steel mills are reportedly close to agreeing to a hefty 40 per cent increase in iron ore contract prices.
Such a rise would return the price of Australian iron ore close to the
pre-financial crisis record set in 2008, which triggered the original
investigation.
Industry and political observers say the chaotic nature of Chinese iron
ore price negotiations and the awkward evolution of the case against
Hu's iron ore sales team reflect China's internal steel industry,
bureaucratic and political divisions.
Hu and three Chinese members of his Rio Tinto iron ore sales team were
originally investigated and then detained in July last year for bribing
steel mills and stealing state secrets to cause ''huge loss to China's
national economic security and interests''.
But the allegations have since morphed into improperly obtaining
commercial secrets and receiving bribes, as confirmed in the formal
charges published by Xinhua news agency on Tuesday night and relayed
yesterday to the Australian government, Rio Tinto and lawyers for the
four defendants.
Donald Clarke, professor of law at George Washington University, said
the detail of this week's charges was puzzling. ''Receiving bribes is a
bit like stealing from the company,'' he said. ''But when Rio Tinto is
not claiming to be harmed and has not been informed of any injury, then
it is very odd.''
A spokesman for Foreign Minister Stephen Smith urged that the case be
''handled transparently and expeditiously'', while Rio Tinto iron ore
chief Sam Walsh said his company was ''very concerned about the nature
of these charges''.
Zhang Peihong, lawyer for defendant Want Yong, said he was ''very
surprised'' by Xinhua's publication of the charges after business hours
on Tuesday night, as lawyers had met with authorities and clients this
week but had been given no inkling of what would ensue. A Beijing
political observer told BusinessDay: ''The decision on how to put an end
to this incident was made at the very last minute, with intensified
internal debate and fighting.''
Similar signs of division have again surfaced with Platts industry
newsletter reporting large steel mills close to securing a 40 per cent
price rise on new annual iron ore contracts. ''China's five largest
steel makers have indicated a willingness … to pay provisionally 40 per
cent more in 2010-11 iron ore contracts compared to the 2009-10
benchmark price,'' said the report.
The Platts report said the five mills, which implicitly include
Baosteel, the anointed industry lead negotiator, gave tentative
agreement in individual discussions but baulked at setting a new
industry-wide benchmark, which would be certain to cause more conflict
with the industry association.
Mr Zhang said the trial of the four Rio employees was likely to be held
soon after Chinese New Year and might be closed to the public, given
commercial secrets are involved.
Source: The Age
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