WRAPUP 1-US raises "fair treatment" in China after Rio case

BEIJING, July 16 - The U.S. commerce secretary plans to bring up "fair treatment" for employees of foreign companies in meetings with Chinese officials on Thursday, in a sign of international concern over the detention of four Rio Tinto executives.

Stern Hu, an Australian citizen, and three Chinese colleagues were detained this month for stealing state secrets to aid Rio in price negotiations for iron ore, which is used in steelmaking. At least one Chinese steel executive is also detained and the probe has reached many of the largest mills.

The murkiness of state secret laws puts foreign investors potentially at risk when dealing with state-owned entities and potentially sensitive economic information.

"These are of course of great concern with respect to U.S. investors and multinational companies from around the world that have projects here," Gary Locke said in an interview with CNN.

"We need to have transparency, we need to have assurances and confidence that people working for these multinational companies ... will be treated fairly.

Rio Tinto evacuated some expatriate staff in China involved in researching the iron ore and steel industry after the detentions, sources in the mining industry told Reuters.

Rio Tinto did not immediately comment on the decision, which was also reported by the Australian Financial Review on Thursday.

Rio Tinto's China team do some negotiations and manage operational details of term contracts for iron ore, a key ingredient in steelmaking, as well as tracking market information.

Information in China is often widely available before it is officially released. On Thursday, a Chinese paper published the second quarter GDP data, citing an official who had given a speech the day before.

At the official press conference later that morning to release the second-quarter data, National Bureau of Statistics spokesman Li Xiaochao said the leak would be investigated but stopped short of saying it constituted a "state secret."

NEGOTIATIONS

The detentions have complicated annual negotiations to set the price at which mills import contracted iron ore.

Reuters reported on Wednesday that in the absence of a formal settlement between the Chinese steel industry and iron ore suppliers Rio Tinto and BHP Billiton, major Chinese mills had agreed to pay 33 percent less than the 2008 prices, in line with settlements reached by Japanese and Korean mills.

The annual negotiations are "definitely not over," a negotiator for the China Iron and Steel Association told the Caijing financial news organisation, but acknowledged some mills had agreed to a 33 percent cut.

The price agreed by the Chinese mills is not final, the negotiator said, adding that "once the Chinese iron ore price comes out, they will be reimbursed or pay more based on that final price."

Sources had told Reuters the China Iron and Steel Association, which had taken over as lead negotiator in the talks this year and was holding out for a better price, would not formally acknowledge the mills' interim deals.

Traditionally, all the mills settle at whatever price is reached between any mill and any of the three miners, BHP, Rio and Vale.

The Chinese mills' agreements range in duration, the sources had said.

This year's negotiations have been particularly fraught, since they coincided with the collapse of a deal by Chinese flagship aluminium firm, Chinalco, to increase its stake in Rio.

Instead, Rio and BHP plan to merge their iron ore operations in western Australia, although they say they will keep marketing separate. The Chinese steel industry fears the tie-up between the two Australian giants will allow them to keep prices higher.

China's flagship steel mill, Baosteel, said in a statement sent to Chinese media that none of its employees had been detained or assisted in the investigation. Chinese media had earlier reported the lead negotiator for previous years' talks, who hailed from Baosteel, was among those investigated in the probe.