Who Is In Prison? Yes, That’s Right.

The always-tense, annual iron ore pricing negotiations between Western producers and Chinese consumers got ratcheted up to a full-blown diplomatic crisis between the Chinese and Australian governments during the 27th trading week of the year.

• In Shanghai on July 5, the Chinese government jailed four employees of Rio Tinto’s iron ore business in China after accusing them of industrial espionage. Three are Chinese nationals and the fourth, 46-year-old Stern Hu, was born, raised and educated in China before becoming an Australian citizen in 1997.

Clearly, Hu’s Australian citizenship is proving to be little help here, as the Aussie foreign ministry sits and frets in impotence. Indeed, Foreign Minister Stephen Smith even admitted that he’d been relying solely on Chinese government websites and press reports to keep abreast of the arrests.

Known as a tough bargainer, Hu has been the leader of Rio Tinto’s iron ore business in China, and had been in the middle of delicate price negotiations with Chinese steelmakers. Hu had reportedly been holding firm on Rio Tinto’s desire for a 33% drop in iron ore prices while the steelmakers were pushing for a price chop of around 45%. The annual negotiations have already dragged on long past their June 30 deadline, making them the longest ones since they started four decades ago.

While no charges had officially been laid at presstime, the Chinese government is accusing Hu of bribing employees of up to five steelmakers to get confidential information that would help Rio Tinto in its price negotiations. Until formal charges are filed, Hu is denied consultation with a lawyer, in accordance with Chinese law.

With Chinese-state-owned Chinalco only last month being denied its chance to acquire a very large stake in Rio Tinto, there are the obvious questions being raised as to whether this is some kind of payback for both disgruntled Rio Tinto shareholders opposed to a fire sale and Australian politicians who opposed the Chinalco deal on national security grounds.

The new Australian Prime Minister Kevin Rudd, who has proved to be a particularly weak and ineffectual successor to the highly capable John Howard, comes out looking particularly bad in the episode. Fluent in Mandarin, Rudd is famously a sinophile and sold himself to the electorate as being best positioned to help Australia take advantage of China’s growing industrial and political heft on the world stage.

• In Canada, roughly 3,600 unionized Vale Inco employees went on strike on July 13, most of them at the flagship Sudbury basin operations, which were already idled owing to a two-month shutdown precipitated by the global recession and plummeting nickel prices.

Vale is reportedly seeking significant wage, bonus and pension concessions, and could probably benefit in the short-term from taking much of its nickel production offline to support nickel prices, so this strike shows every sign of being a prolonged one.

With many minerals in oversupply and unemployment levels rising, management teams and large shareholders worldwide are gaining a renewed appetite for hard-nosed labour negotiations and union-breaking, so the coming years should see a new wave of labour strife.

Those operations with relatively harmonious relations between management and workers should be poised to benefit from spikes in commodity prices sparked by strikes at competitors’ operations.

• Add Bob Buchan to Canadian mining’s list of multimillion-dollar philanthropists.

The semi-retired founder of Kinross Gold has donated a cool $10 million to the Department of Mining Engineering at Queen’s University in Kingston, Ont.

Queen’s describes it as the single largest donation to mining education in Canadian history, with $8 million earmarked for an endowment to fund academic and staff positions, and $2 million to support new student-focused programs and curriculum development.

And, you guessed it, the department will be renamed the “Buchan Department of Mining.”

Founded in 1893, the department today ranks among North America’s largest and best mining schools. Buchan obtained his master of science in mining engineering from Queen’s after earning an undergraduate degree in mining from Heriot-Watt University in Scotland.