It is reported that a Chinese steel executive is also detained along with four Rio Tinto employees under an investigated being carried out for leaking China's bottom line on iron ore prices.

As per report, Mr Tan Yixin, the head of iron ore imports for state owned steelmaker Shougang, is suspected of revealing China's negotiating strategy to Rio Tinto Ltd.

After more than six months of hard negotiations, China appears to have been boxed in, forced to accept Rio's price or to abandon long term deals and risk destroying a decades old pricing system.

The China Securities Journal said Shanghai's State Security Bureau accused the three local Rio staff and senior Australian executive Mr Stern Hu of bribing unidentified Chinese steelmakers during tense iron ore price negotiations this year. It said that “"The activities of Stern Hu and the others violated Chinese law as well as international business morality. This seriously damaged China's economic security and interests.”

The shock detentions appear to have left the price talks in limbo. The episode has put the industry, which relies on open market information for trading and pricing, in an ice box.