The arrest in China of four Rio Tinto employees, including one Australian, is of great concern to the families of those involved but also poses a threat to Sino-Australian relations.



As of this morning, Australia's Department of Foreign Affairs and Trade is still calling for ''urgent consular access'' to the Australian, Stern Hu, who has been detained along with the rest of the iron ore sales team since Sunday.



The bar in granting Australian consular staff access to Mr Hu is untenable and needs to be immediately dropped.

While the reasons for the arrests are still unclear, the detentions are taking place against the backdrop of tense and drawn-out negotiations over iron-ore prices.

Chinese steelmakers are so far refusing to accept the 33 per cent price cut agreed by Japanese and Korean counterparts, instead allowing the June 30 deadline to pass while still demanding a deeper discount.



Relations between the Chinese and Rio Tinto have also soured since the miner dumped its $US19.5 billion ($24.3 billion) tie-up with state-owned Chinalco last month in favour of a deal with rival BHP Billiton.

In the aftermath of that switch, Rio was labelled a ''dishonourable woman'' by some in the Chinese press.



Rio has gone into a communications blackout and won't comment further on the detentions given their sensitivity. Privately, however, many within the global miner are concerned about the welfare of the four employees.

(Rio shares have taken a modest drop this morning, losing about 82 cents, or 1.7 per cent in early trade, to slump to $46.53. The overall market is down about 1.2 per cent.)

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China's leadership no doubt has bigger issues demanding attention right now, not least the ethnic violence that's left hundreds dead in its most western province. Overnight, President Hu Jintao has decided to fly home, pulling out of plans to attend the summit of G8 leaders in Italy, a forum in which London-based Rio's travails would likely have been raised by Britain.



For its part, though, the Rudd Government needs to take clear and decisive action while avoiding a potential diplomatic stand-off with Australia's largest trading partner. In short, ensuring the safety of the four detained employees needs to be the government's main priority.



