Rio Tinto Group

Stern who? Rio's China relations move on

PUBLISHED : Saturday, 21 August, 2010, 12:00am
UPDATED : Saturday, 21 August, 2010, 12:00am


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You get the impression that Stern Hu is one name that Rio Tinto chief executive Tom Albanese never wants to hear again.

At a press briefing in Shanghai he was reluctant to talk about the former head of Rio's China operations who was jailed earlier this year for accepting bribes and stealing trade secrets.

'We've said quite a lot about that - I think we have been very open. I'm not sure there's more I can say,' Albanese said yesterday.

On Thursday night in a wide ranging speech to a Melbourne Mining Club dinner in Shanghai he said that China, as Rio's biggest customer, was central to the company's success. But at the same time he talked about developing a relationship that went beyond customer and supplier to one of partnerships as China assumed an increasingly important position in the mining sector and with Rio.

Although Albanese did not mention Stern Hu by name it is clear that his trial and conviction looms over the new talk of partnerships and long term co-operation with China in contrast to the somewhat edgy, arguably more aggressive relationship that marked their dealings with each other in previous years.

Hu, an Australian citizen, along with three other Rio Tinto officials based in China, were arrested a year ago and pleaded guilty at a trial earlier this year to accepting bribes and stealing trade secrets in the multibillion-dollar iron ore business.

The arrests were widely viewed as retaliation for the breakdown of a US$19.5 billion investment by Chinese aluminum producer Chinalco in Rio Tinto. The collapse of that deal infuriated the Chinese, but Hu's guilty plea was acutely embarrassing to Rio Tinto. At the same time there were tensions over the collapse of negotiations to agree the benchmark price for iron ore, a system which has since been replaced by a quarterly pricing mechanism.

Albanese reiterated his desire to improve relations with China. As an example of this new approach to China, he pointed to the recent agreement with Chinalco to establish a joint venture covering the development and operation of the Simandou iron ore project in Guinea.

'The key to what we want to do in China is to develop long term constructive relationships to find those right opportunities over which we can mutually co-operate,' he said.

He added that China was going to be an increasingly large consumer of Rio's products so the company had to find the right commercial avenues to benefit from that for the long term.

'Strategic interests are aligned. China needs what we produce. We want to sell more of what we produce, so that's what we should be focusing on,' he said. In what was almost a statement of contrition Albanese continued: 'Rio Tinto wants to build a broad, genuine partnership with China, based on shared interests. We also seek to develop mutual respect and trust.

'In return, we want Rio Tinto to be a reliable and valued part of China's long term development.'

Albanese said Rio could also help China's goal of securing sustainable supply of raw materials over the long term by acting as a resource development partner in places like Africa.

He said another area of co-operation could be in helping state-owned enterprises explore for minerals within China. 'We believe we can bring that expertise and know-how to bear in helping China to find major ore bodies on its home soil.'