Rio Tinto signs big China deal as staff await trial

Sydney: Mining giant Rio Tinto announced a huge iron ore deal with China's state-run Chinalco yesterday, days before four of its staff go on trial in a case that has threatened diplomatic and trade ties.

Rio said Chinalco signed a non-binding, $1.35 billion (Dh4.95 billion) deal to help develop a massive mine in Guinea, drawing a line under a period of turbulent relations with its biggest shareholder.

"We have long believed that Rio Tinto and Chinalco could work together on major projects for mutual benefit," said Rio chief executive Tom Albanese.

The debt-strapped Anglo-Australian miner snubbed a $19.5 billion cash injection from Chinalco last June, angering some Chinese commentators.

Weeks later, China's spy agency swooped on Australian citizen Stern Hu and three Chinese colleagues in Shanghai, prompting a rapid plunge in relations with Canberra and sending shudders through China's foreign business community.

Hu, Wang Yong, Ge Minqiang and Liu Caikui are scheduled for a three-day trial in Shanghai from Monday over alleged bribery and industrial espionage, setting the stage for renewed sparring between the two governments.

Australia yesterday insisted business with China, now its biggest trading partner, would not be harmed by the trial.

"The two matters are separate," Trade Minister Simon Crean told public broadcaster ABC. "We are treating the Stern Hu case strictly as a consular case. We've never sought to make any link and neither have the Chinese in their discussions with us."

However, Prime Minister Kevin Rudd has already warned that the "world will be watching."

Analysts say the case goes to the heart of Australia's relationship with China, as it centres on its biggest export to the country, iron ore, and touches on issues such as judicial independence.