Australia urged China to deal transparently with the trials of four Rio Tinto staff accused of bribery and stealing commercial secrets, as the firm's CEO said the Asian country remained a key part of its long-term plans.
Against a backdrop of investor concern over dealings with Beijing, China on Wednesday indicted the four China-based employees of Anglo-Australian Rio Tinto
We continue to emphasize to the Chinese authorities the need for the case to be handled transparently and expeditiously, a spokesman for Stephen Smith, Australia's Foreign Minister, said on Thursday.
The four are set to stand trial in Shanghai. If found guilty they could face up to seven years in jail on the commercial secrets charge and up to 20 on the bribery charge, said Zhang Peihong, a lawyer for one of the accused Chinese nationals.
Our primary concern remains the well-being and care of our colleagues and thus it would be inappropriate for us to comment further, chief executive Tom Albanese told reporters after releasing Rio's annual results.
Rio said its long-term outlook remained strong as China, as well as India, continues to urbanize and industrialize over the next two decades.
Albanese said Rio had continued talks on possible mining ventures with China, which has become its single largest customer.
There are a number of project-based opportunities we could work with China on... we are in discussions, but it's consistent with what I've said over the past year and a half, he told reporters in London.
It's fair to say we are putting resources into developing this relationship. We are certainly recognizing the long-term strategic importance of China.
At the center of the Rio case is Beijing's demand for a lower yearly fixed price for iron ore, an essential commodity to drive Chinese steel plants, and Rio's refusal to lower the benchmark price it had reached with Japanese and Korean mills.
China is embroiled in a series of trade disputes with other countries, while Internet search engine Google has said it is getting harder to operate in China and has threatened to pull out of the country over censorship and hacking concerns.
China expert Hui Feng at the University of Queensland in Australia said the Rio case was a sign Beijing was determined to play tough with foreign firms.
I think this is a clear signal to foreign business that the government is serious about cracking down on what they see as illegal activities, Hui said. In the past the government largely turned a blind eye to such activities.
But Andrew Gilholm, senior analyst at Control Risks in Seoul, said the Rio and Google cases did not reflect a new, harder Chinese line.
I think these are very specific and quite isolated cases rather than a wider trend that's going to affect most foreign businesses in China, Gilholm told Reuters Television.
China is very much aware that it needs open trade and investment... It's still very committed to that basically open market and good relations with foreign investors.
Foreign investors have also called for China to clarify its complex laws to make it easier to conduct business.
Rio's share price was up 2.6 percent ahead of its second-half results, due out Thursday afternoon, outperforming the overall market, with metals up across the board.
China is Australia's biggest trade partner. Australia exported $15 billion worth of iron ore to China in 2008, or 41 percent of China's iron ore imports.
Resource-hungry Chinese firms have been behind several tie-ups with Australia firms in the past year.
In January, Australia approved China's biggest-listed gold miner Zijin Mining Group's $498 million bid for Australia's Indophil Resources NL, clearing the way for Zijin's dream of becoming a top global copper producer.
But the Rio case and several high profile failures by China to buy into the country's resource sector in 2009 have strained ties diplomatically and commercially.
The collapse of a bid by China state-owned aluminum group Chinalco to invest $19.5 billion in Rio, which would have been China's biggest overseas investment, left China vulnerable to just two suppliers -- the Rio/BHP combination and Brazil's Vale -- which control 70 percent of global iron ore trade.
The Rio case poses election-year difficulties for Australian Prime Minister Kevin Rudd, a China expert under pressure from media and political opponents at home to use his relationship with Beijing's leaders to help free Hu.
(Additional reporting by Rob Taylor and James Grubel in Canberra and Eric Onstad in London)
(Editing by Ron Popeski, John Stonestreet)