Russell: The term critical minerals is meaningless and needs a new strategy.

It is now so common to use the term critical mineral that its original meaning has been lost.

It is time to create a new definition of what is truly vital for a nation and what is simply important.

The Mining Indaba conference held in Cape Town last week also made it clear that what's important to one country may not be as critical to another.

What is a better way to define a critical mineral than by its name?

It's simply a mineral you don't possess and worry you will not be able get it in the future.

You need a certain mineral, but don't possess any domestic reserves. Your strong allies don't also have enough deposits, and you do not have control over the supply chain.

This is a different mineral from a core or essential mineral that commodity analysts CRU call - i.e. a mineral that you require but are confident you can source both now and in future.

Why is it important to distinguish between the two?

Westerners tend to view core minerals as ones that can be left to the market to supply. They rely on private mining firms to explore, develop, and produce them on commercial terms.

A truly critical mineral will require a different acquisition strategy, including direct funding of new mines, strategic relationships with the host country, and offtake agreements not dependent on market prices.

China has shown that it is much better at focusing on minerals they deem critical. It invests in mines, infrastructure and processing plants in other countries, and also in its own country.

China is the largest importer of commodities in the world. It dominates the global supply chain of minerals essential to the energy transformation, including lithium, cobalt and nickel.

These four minerals are no surprise to China, but are they still important for China, given that China dominates the production and supply of these minerals?

Beijing's approach to ensuring supply was more strategic than commercial.

Copper, aluminium and graphite are also included on the list of critical minerals for the United States as well as the European Union.

Iron ore, gold potash, and uranium are among the critical minerals on China's list.

One could argue that these minerals are critical to China's economy, and are also ones in which Beijing has little influence on the supply chain.

Consider iron ore as an example. China imports over 80% of what it needs. Of those imports, more than 90% are from Australia, Brazil, and South Africa.

Beijing has no control over these resources, despite its ownership of some companies that mine iron ore. It is a price taker and has been for the last two decades.

NEW TACTICS NEEDED

The United States and Europe could be asked why copper is included on their list of critical minerals, when there is no threat to supply. This is because most of the copper mined in the world is controlled by Western firms, in countries which are generally aligned with Western values.

Aluminium and lithium are also important, but cobalt's importance for energy transition is still being questioned.

Nickel is a fascinating case. Both the United States and European Union consider it critical but have not done anything to guarantee supply.

They have instead allowed Chinese-controlled mining and processing plants to dominate the Indonesian market, while others in countries such as Australia, a strong ally of China's, are closed due to low prices.

It would make sense to continue to supply nickel from allies, even if the cost was higher.

If Western countries are truly concerned about the security of minerals like graphite and tungsten, they must change their approach to developing mines.

Western mining companies have difficulty securing long-term financing because they cannot guarantee the price that will be paid in several years, when a new mine is built and operational.

They lose out to Chinese firms that are less concerned about commercial results.

Western governments must also become more proactive when it comes to engaging countries in resource-based relationships, using soft power like aid programmes as well as direct benefits such market access to foster stronger relationships.

It appears, however, that U.S. president Donald Trump has adopted the exact opposite strategy, abandoning all aid and threatening to impose widespread tariffs against both allies and enemy alike.

The European Union appears to be moving at a snail's pace. It produces policies and reports about critical minerals, but does not seem to do much to develop the supply chains that it controls.

These are the views of the columnist, an author for.

(source: Reuters)