Four employees, including an Australian executive, of Rio Tinto, one of the world's biggest mining companies, have been detained in China for allegedly stealing state secrets, dragging the China-Australia relations under fire.

China accused the detained staff of harming China's economic interests in a case that has rattled currency markets.

Stern Hu, general manager of Rio Tinto's iron ore business in China, is an Australian citizen, while other three employees detained are Chinese citizens.

The four detained employees could be labeled with charges of espionage, which could bring them severe penalties, including the capital punishment.

Australian-British Company, Rio Tinto, said in a statement, "We have been advised by the Australian government of this surprising allegation. We are not aware of any evidence that would support such an investigation."

Australia's Foreign Minister Stephen Smith described the spying allegations against Hu as "very surprising" and informed that they were eager to ensure Stern Hu's well being but his officials were yet to talk to Stern Hu.

According to Mr. Smith the case has no relations with Rio Tinto's decision to scrap a planned $19.5 billion investment in the mining company by Chinalco.

Sources said that the executive detained from China's Shougang Group, Tan Yixin, assistant general manager of China Shougang International Trade & Engineering Corp was close to Hu.

Australian dollar plunged against the yen in offshore trade, fearing the issue might damage China-Austria trade relations.