Learn lessons from dispute: Jones

IRON ore veteran George Jones believes Australia and China must learn from the "spying" dispute involving Rio Tinto iron ore negotiator Stern Hu, given the importance of the relationship between the two nations.

The outgoing chairman of Gindalbie Metals is heading back to China next week for Premier Colin Barnett's visit to Beijing, where the key discussion point will be how to facilitate future Chinese investment in Western Australia for the benefits of both sides.

Gindalbie represents one of China's most important investments in WA, with AnSteel holding 36 per cent of the company and half of the $1.8 billion Karara magnetite development in the Mid West.

Mr Jones rejected the view that the Hu dispute was about China seeking vengeance for the recent iron ore price settlement or Chinalco's failed investment deal with Rio Tinto.

"I'm very disappointed with what has happened (but) I think we should respect China's integrity that there is obviously something involved," he said. "I don't think they are doing it just to get even - I just don't believe that."

Stressing he was not "casting any aspersions" on Mr Hu, he said the dispute probably also reflected a breakdown in Sino-Australian understanding at a sensitive time.

"I think there's a big element of that ... and I think because of all the other things that are happening, it's probably grown into more significance than it otherwise should have," Mr Jones told WA Business News.

Mr Jones said he understood Beijing's concerns about Australia's hardening attitude to Chinese investment, having himself been frustrated by the time it took for AnSteel's investment in Gindalbie to win Canberra's approval.

Consequently, he hoped the current dispute would be a catalyst for change.

"Australia and China need to find a way to work together - our futures are too important and intrinsically linked," he said.

In particular, dumping the secretive annual price talks between iron ore suppliers and steel mills in favour of a more flexible and open pricing system would be a positive step in preventing a repeat of such disputes.

"I think the emergence of a different pricing mechanism for iron ore will take the pressure off these types of negotiations," Mr Jones said.

Mr Jones' trip to China next week will be one of his last official duties for Gindalbie, following this month's surprise announcement that he would be stepping down as chairman.

The decision will enable Mr Jones to take six months off to belatedly complete an intensive rehabilitation program needed to recover from surgery to address an inner ear disorder.

While Gindalbie's business demands took immediate priority over recovery, Mr Jones said the time was now right to consider his own health.

While he expects to remain a non-executive director of Gindalbie, Mr Jones also plans to pursue new business opportunities. But instead of his usual executive chairman-style approach, he hoped to help find and build deals, set them up and then appoint good people right at the start, and then not have to continue on.

Mr Jones said he would also keep up his significant charity commitments, as a long-time benefactor and director of the Parkerville children's home, and supporter of the new Ear Science Institute in Perth.