AUSTRALIA is facing a potential diplomatic spat with China over the arrest of Rio Tinto’s iron ore sales team — including an Australian — by authorities in Shanghai.

The Federal Government last night was seeking urgent consular access to Australian passport holder Stern Hu, one of four Rio Tinto executives believed to have been detained since Sunday.

Mr Hu’s colleagues and Australian diplomats were in the dark about why they were being detained. “They just failed to turn up to work on Monday and have disappeared,” said an Australian source.

Mr Hu also failed to answer his mobile phone last night.

The arrests come against the background of recent bitter negotiations over iron ore sale contracts and Chinese anger over Rio Tinto’s decision earlier this year to abandon a $US19.5 billion merger with state-owned Chinalco.

The Age has learned that Rio’s iron ore team avoided meeting in China for more than a month — holding talks in Hong Kong and Singapore instead — out of fears their phones and emails were being bugged and that key information was finding its way straight back to the China Iron & Steel Association.

Officers from China’s Public Security Bureau are also believed to have raided Rio’s Shanghai’s offices this week and removed computers used by each of the four executives.

There was unconfirmed speculation last night that the arrests could relate to alleged manipulation of the iron ore market.

A spokesman from the Department of Foreign Affairs and Trade told The Age that the Government was aware of reports an Australian had been detained since Sunday but that it was unclear about the reasons for his arrest.

While the Foreign Affairs spokesman declined to reveal the Australian executive’s identity, The Age can confirm that he is Mr Hu. The other three employees being held are Chinese passport holders.

The Foreign Affairs spokesman said the Australian’s family had been informed and were being updated regularly.

“The embassy in Beijing and the consulate-general in Shanghai are seeking to confirm these reports and are also seeking urgent consular access to him,” the spokesman said. “Staff of the consulate-general and DFAT in Canberra are in communication with the man’s family and his employer,” the spokesman said.

Rio Tinto last night confirmed the arrests. “Rio Tinto intends to co-operate fully with any investigation the Chinese authorities may wish to undertake and has sought clarification on what has occurred,” the company said in a statement.

“Rio Tinto is concerned about the employees’ wellbeing and is doing everything possible to help them and support their families.”