Rio Tinto Ltd. (RIO.AU) iron ore chief executive Sam Walsh said Friday the company isn't in negotiations with China over benchmark iron ore prices, leaving annual contracted prices for Chinese steel mills up in the air.

Despite the suspended talks - coming amid strained relations between Australia and China over the arrest of Rio executive Stern Hu - China is still buying Rio's contractual ore shipments on a "provisional" pricing basis, Walsh told reporters in Perth.

The provisional value is based on Rio's 33% benchmark price cut agreed to earlier this year by its Japanese customers, suggesting that China is struggling to gain traction in its efforts to secure a steeper price discount from Australian suppliers.

Rio Tinto is "not negotiating" contract iron ore prices with China "at this point in time", Walsh said.

Asked whether China iron ore talks will resume at any point, Walsh said, "I expect that they will, but I don't know when."

"Remember that we have our negotiators detained," he said, referring to the recent imprisonment of Rio's Chinese iron ore team, which included Australian citizen Stern Hu.

A Rio Tinto spokesman later told Dow Jones Newswires that the company’s iron ore talks with China have been at an "impasse" since Rio struck its deal with Japan in late May - well before the arrest of Hu in early July.

There "may have been some discussions (with China)" since the Japanese deal, but "certainly nothing of great significance", he said.

The spokesman said that Hu, head of Rio Tinto's (RTP) iron ore operations in China, plays a senior role in Rio's overall marketing effort in the country, but isn't the lead price negotiator.

Singapore-based Will Malaney, president of Rio Tinto Iron, Asia, is the company's lead negotiator in the region, the spokesman said.

Walsh said Rio is shipping the majority of its iron ore to China on a "provisional" price, based on Rio's settlement in late May with Japan.

China, the world's biggest importer of iron ore, has refused to recognize that settlement, arguing for a steeper discount.

Last month, China and Australia's Fortescue Metals Group Ltd. (FMG.AU) announced a supply deal priced 3% below the Japanese benchmark, but analysts dismissed that arrangement as a face saver for China that was unlikely to impact the wider industry.

RBS analyst Warren Edney said Chinese consumers "seem happy at the moment to take iron ore based on the provisional pricing, which appears to be as close as possible to the Asian benchmark price".

"China still wants iron ore, and the material they have been buying on a provisionally priced basis, from Australia and Brazil, has been cheaper than material they’ve been able to purchase from India on a spot basis," Edney told Dow Jones Newswires.

Analysts estimate that Australian benchmark ore, landed in China, is priced at roughly US$70 a metric ton, versus current Chinese spot prices of around US$80/ton.

Walsh said China's arrest in July of Stern Hu and his three Rio colleagues has moved into the legal stage.

"We are respecting the Chinese judicial system and we are pleased that our four employees have been able to hire top-notch lawyers who will represent them," Walsh said. The lawyers visited the employees recently, he said.

He said a regular consular visit by Australian officials to Stern Hu is due "shortly".

Hu was arrested in Shanghai in July and stands accused of industrial espionage and bribery during fraught iron ore negotiations.

Walsh said the company's proposed production joint venture with BHP Billiton Ltd. (BHP) in Western Australia won't reduce competition in the global iron ore market.

"We have heard concerns that this joint venture will have a negative impact on competition," Walsh said in a speech to a Committee for Economic Development of Australia function.

"My simple response is to say no, it will not reduce competition."

Rio and BHP are committed to have the joint venture in place by the middle of 2010, he said.

Walsh said iron ore mining companies need to be cautious about the recent price rally, given that spot prices have eased to around US$80/ton from more than US$100/ton early last month.

The price fall mirrors recent declines in Chinese steel prices, Walsh said.

Despite his caution, Walsh said that economic stimulus interventions by many governments have helped the steel and iron ore markets increase production.

Almost all of the Group of 20 countries agreed to some type of fiscal stimulus plan totaling some US$690 billion for 2009, he said.

-By Stephen Bell, contributing to Dow Jones Newswires; 61-8-9244-4243;sgbell@bigpond.com