Press reports from Australia are buzzing over the arrest of four employees of Rio Tinto in Shanghai, with the Chinese government alleging "state secret theft" in what would normally—in the West—be considered a commercial negotiation process.

Australia has good reason to be concerned because China is the customer for more than half of its ore sales, and this isn't the first time China Inc. has resorted to bullying behavior to try to secure better pricing than "market" on its ore purchases. The Chinese steelmakers' ultimate shareholder, the Chinese government in Beijing, has used diplomatic and other non-commercial channels over the past few years to improve pricing dynamics.

As we sit here in mid-July, we're watching history in the making. A new economic model between the global iron ore miners and their...