Four Rio Tinto workers detained in China over espionage and bribery claims are facing nearly 18 months in jail while authorities gather evidence against them.

Stern Hu, an Australian citizen, and his three Chinese co-workers who run Rio’s Shanghai office, were detained on Sunday on charges of stealing top-secret information.

It emerged yesterday that China’s internal security agency is claiming that as well as spying, the four employees had bribed Chinese steel workers during discussions over iron ore contracts.

They are accused of using “improper methods, roping in and bribing officials at Chinese steel producers” in actions that “seriously damaged China’s economic security and interests”.

Rio and other iron ore suppliers are locked in talks with China’s steel mills about pricing for 2009-10. The issue has not been resolved even though many contracts expired on June 30. Rio has refused Chinese demands for a bigger price cut.

Meanwhile, it has been reported that Tan Yixin, the head of iron ore imports for the state-owned steelmaker Shougang, who is being detained along with the four Rio employees, is being investigated for leaking China’s “bottom line” on iron ore prices. It is understood that he was suspected of “revealing China’s negotiating strategy” to Rio.

The four Rio workers have not yet been officially arrested. Approval to arrest a foreign national must be gained from the provincial level of the Public Security Bureau (PSB), China’s criminal investigation body.

If arrested, defendants can be held for up to 10 months as the PSB gathers evidence. Zhang Zaiping, a partner specialising in criminal law at Lusheng Lawyers in China, said: “In this period it’s hard even for a defendant’s lawyers to discover the charges against their clients.”

The PSB must then present its evidence to a prosecutor — a process that can take up to five months. If the case reaches court, the hearing could last up to seven months.

The four Rio workers are facing life imprisonment for espionage. Australian consular officials were due to visit Mr Hu in detention yesterday.

Stephen Smith, Australia’s Foreign Minister, said: “China has its own laws about state secrets. They are clearly broader than the view that Australia might take. Frankly, it is difficult for a nation like Australia to see a relationship between espionage and national security and what appeared to be suggestions about commercial or economic negotiations.”

Chinese officials in Canberra told Mr Smith’s office that Mr Hu was being treated well and in accordance with Chinese law.

A spokesman for Rio said: “The company is surprised and concerned by the allegations. We are not aware of any evidence that would support them. Rio Tinto has not been informed by the Chinese authorities of any charges in relation to these allegations. We remain ready to assist these authorities in their investigations.”

Chinalco, China’s state-owned metals giant, said yesterday that the detention of the Rio employees was not related to its failed bid earlier this year to invest $19.5 billion (£12 billion) in the Anglo-Australian mining business.

Rio abandoned the deal under pressure from shareholders, opting instead for a joint venture with BHP Billiton, its long-term rival, and a $15 billion rights issue.

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