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This report by Bloomberg.com is fascinating - executives on Rio Tinto's negotiating team have apparently been arrested and jailed by China during tough negotiations over China's desire to purchase much-needed iron ore from Rio Tinto:

Rio Tinto Group is known for playing hardball when negotiating iron-ore prices, prompting Japanese steelmakers to present the company with a faceless doll as a tribute during one round of talks.

?The gift signaled how tough Rio had played the negotiations,? Doug Ritchie, the London-based company?s global head of strategy, said in May. Now Rio faces higher stakes in China, which overtook Japan in 2003 as the world?s biggest buyer of iron ore, and this month arrested four of the company?s executives as annual price talks with Chinese mills stalled.

China, destination for half of the $52 billion global seaborne iron ore trade, has accused four members of Rio?s iron ore team in Shanghai, including Australian Stern Hu, of stealing state secrets. Hu?s detention by Chinese security officials is related to a criminal probe into the talks, Australia?s foreign minister Stephen Smith said this month.

?What they appear to be wanting to do, in classic Stalinist fashion, is discipline the steel industry and intimidate their negotiating partners at the same time,? said Paul Monk, founder and director of Austhink Consulting in Melbourne, and former China analysis head at Australia?s Defence Intelligence Agency. ?From a point of view of a state that is trying to establish its credentials in the market economy of the world, it is a really stupid thing to have done.?

What are these "state secrets"? Well, China purchases approximately $25 billion worth of iron ore a year right now. According to Chinese state media, Hu and three other Rio Tinto employees who are also detained, are accused of bribing employees of Chinese steel companies to obtain confidential information on China's negotiating strategy.

IF CHINA'S NEGOTIATING STRATEGY WAS ACQUIRED, WHO IN CHINA GAVE IT TO RIO TINTO? INQUIRING MINDS WANT TO KNOW . . . .

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