July 8 (Bloomberg) -- Rio Tinto Group, the second-largest iron ore producer, said four employees from its Shanghai office are being held for questioning by Chinese authorities.

Rio hasn’t had contact with the workers since they were detained July 5, spokesman Nick Cobban said yesterday by phone from London. The reason for the detentions is “unclear,” he said in a separate e-mailed statement. He declined to identify the four.

One of the detained executives may be an Australian citizen and that nation’s embassy officials are seeking access to him, Miles Armitage, a spokesman for Australia’s Department of Foreign Affairs and Trade said in an e-mailed statement. The Sydney Morning Herald identified the man as Stern Hu in a report saying the other three are Chinese passport holders from Rio’s iron-ore sales team. Armitage couldn’t confirm details.

London-based Rio is among iron ore producers negotiating annual contracts with China’s steel industry, the biggest buyer of the raw material. State-owned trader China Minmetals Corp. said on June 18 that the talks were stalled. Chinese steelmakers are seeking a bigger price cut than the 33 percent agreed on between Rio and Japanese, Korean and Taiwan producers, Hebei Iron & Steel Group Vice President Tian Zhiping said on July 2.

“We intend to co-operate fully with any investigation the Chinese authorities may wish to undertake and have sought clarification on what has occurred,” Cobban said. “We are concerned about our people’s wellbeing and are doing everything we can to help them and support their families.”

Chinalco Spurned

Australian officials have been in contact with one of the detainee’s family, Armitage said in the statement. Calls to the China Iron & Steel Association in Beijing after hours weren’t immediately returned.

Rio said last month that some iron ore supply contracts may revert to so-called spot pricing, or market rates for immediate delivery, from June 30 if there’s no agreement contracts. Fixed- price iron ore contracts cover the fiscal year starting April 1. The decline in contract prices is the first in seven years.

The company last month scrapped a planned $19.5 billion investment from state-owned Aluminum Corp. of China in favor of a rights offer and the formation of an iron-ore joint venture with BHP Billiton Ltd. Illtud Harri, a London-based spokesman for Australia’s BHP, declined to comment. Fernando Thompson, a Rio de Janeiro-based spokesman for Brazil’s Vale SA, the world’s largest iron ore producer, also declined to comment.

To contact the reporter on this story: Brett Foley in London at bfoley8@bloomberg.net

Last Updated: July 7, 2009 19:16 EDT