The detention of staff by the Chinese authorities forced global miner Rio Tinto to suspend iron ore price negotiations with Chinese steel mills. China accused Stern Hu, an Australian of Chinese origin, of spying and detained him in July; along with three employees of Rio’s Shanghai-based team.

Confirming the development, Rio's head of iron ore, Sam Walsh said: "At this point we're not negotiating. Remember, we have our negotiators detained."

Earlier, China and Rio failed to resolve differences in the summer during an annual round of price negotiations. China asked for large price-reduction of 40 per cent; while Korean and Japanese mills were ready to settle for a 33 per cent reduction on last year's contract price.

Sources said that China government was tight lipped about volatile prices in the iron ore spot market and accused Rio’s staff for commercial spying and data theft.

Chinese companies are said to be purchasing ore at the prices offered by Korean and Japanese mills, but commercial talks have been stalled following the incident. It may take some time for both parties to reach a consensus for resolving the pricing issues.