China reportedly inks iron ore deal; Rio execs detained

China backed down on iron ore prices, signing up to the same 33 percent price cut agreed by Asian rivals but only for a six-month period rather than a full year, the China Business News said on Wednesday, citing informed sources it did not name.

The deal, which could not be immediately confirmed, would conclude some nine months of tense negotiations that threatened to scupper the decades-old annual pricing ritual, and which took an unexpected turn this week when four Rio Tinto employees in Shanghai were detained by Chinese authorities.

The four, including Stern Hu, an Australian citizen and the head of iron ore marketing in China, were part of Rio Tinto's (RIO.AX) (RIO.L) iron ore sales team, an industry source said.

The arrests come at a sensitive time as Rio Tinto snubbed a $19.5 billion investment plan by China's state-owned metals firm Chinalco last month, frustrating its efforts to wield more clout on global commodity markets, even where it is the dominant buyer, such as iron ore.

But some traders said the dention of Rio officials appeared coincidental rather than a bargaining ploy deployed by China, which arrested base metal traders a few years ago over its investigation into an alleged trade scam.

China's Foreign Ministry and Shanghai police gave no reasons for the arrests, while a spokesman for China's embassy in Canberra also declined to comment.

Australian Climate Change Minister Greg Combet said the government was making "every effort" to find out why the four China-based employees had been held.

"Once we ascertain through the appropriate channels what exactly is going on and what the reasons for this detention involve ... we'll have something to say," Combet told reporters.

Several Chinese steel officials contacted by Reuters on Wednesday said they were unaware of any settlement, though two sources not directly involved in the discussions said they had heard of a possible agreement, but could not confirm it.

"All news should be subject to the statement from CISA and Baosteel. I have nothing to say about the news," Chen Xianwen, head of the market research department at the China Iron and Steel Association industry body, told Reuters.

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