Rio halts Chinese talks

"At this point in time we are not negotiating," said Sam Walsh Rio's chief executive of iron ore. "Remember we have our negotiators detained."

But Rio tried to distance itself from Walsh's remarks, confirming talks were not taking place but denying they were suspended because of the arrests.

The head of the negotiations, Sten Hu, who has dual Australian and Chinese citizenship, was detained on espionage charges with three of his Chinese colleagues two months ago. Last month the charges were reduced from claims of espionage against the state to ones of stealing commercial secrets and bribery which could still carry seven-year jail sentences.

Walsh, who has been heading Rio's attempts to secure the release of the four men, was asked whether talks over iron ore pricing would restart. He said: "I expect they will but I don't know when."

He said Rio is currently shipping iron ore to China on a "provisional" price which is based on the settlement it reached with its Japanese customers earlier this year.

Walsh said the legal case was moving forward: "We are respecting the Chinese judicial system and we are pleased that our four employees have been able to hire top-notch lawyers who visited them recently."

The Rio executive said he was cautious about the recent rally in metal prices given that the spot price for iron ore had eased from more than $100 a tonne early last month to around $80 a tonne today. He added that this had effectively mirrored the fall in Chinese steel prices.