Page last updated at 12:52 GMT, Friday, 19 March 2010

Rio Tinto signs mining deal with China's Chinalco

A crane drops iron ore imported from Australia at Rizhao port in China (file image)
China buys vast quantities of iron ore from companies including Rio Tinto

The Anglo-Australian mining company Rio Tinto says it has signed a deal with China to develop a massive iron ore mine in West Africa.

China's state-backed metals group Chinalco will pay $1.3bn (£0.85bn) for 47% of the Simandou project in Guinea.

The tie-up comes amid tensions between China and Australia over next week's trial of four Rio employees on bribery and commercial spying charges.

China has rejected requests for the trial to be fully open to diplomats.

The four accused, Australian Stern Hu and three Chinese colleagues, Wang Yong, Ge Minqiang and Liu Caikui, were arrested last June and go on trial in Shanghai on Monday.

At the time of their arrest they were working on an iron ore price-setting round which would determine the price that China and other customers would pay for the commodity for the year - an annual process that is now under way again.

Four executives including one Australian on trial
Group face charges of bribery and illegally obtaining commercial secrets
Parts of the trial will be held behind closed doors, despite Australian objections

The Australian embassy in Beijing has been told by the Chinese authorities that parts of the trial relating to commercial secrets will be held behind closed doors.

The Australian department of foreign affairs and trade said it was disappointed but "does not propose to make further representations on this matter".

And Australian Trade Minister Simon Crean said trade ties with China would not be harmed by the forthcoming trial.

"The two matters are separate," Mr Crean told ABC. "We are treating the Stern Hu case strictly as a consular case. We've never sought to make any link and neither have the Chinese in their discussions with us."

In a statement, Rio Tinto CEO Tom Albanese welcomed the Chinalco tie-up.

"We have long believed that Rio Tinto and Chinalco could work together on major projects for mutual benefit," he said.

A month before the arrests, Rio scrapped a $19.5bn (£12.5bn) deal with Chinalco in favour of a tie-up with rival giant BHP Billiton.

Jobs for Guinea

According to Rio Tinto, Simandou is one of the world's biggest undeveloped iron ore deposits.

The deal also covers rail and port infrastructure and could create tens of thousands of jobs in Guinea.

BBC Guinea reporter Alhassan Sillah says the timing of the announcement is no coincidence, coming just two weeks after a date - 27 June - was set for elections in Guinea to restore civilian rule.

He says the international community has renewed faith that the military junta will return to barracks.

Last year, China was condemned by human rights groups after it signed a $7bn (£4.5bn) mining and oil deal with the government just two weeks after some 150 protesters were allegedly killed by soldiers.

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