US backs a South Africa project to extract rare earths as it counters China

US Backs South African Rare Earths Project to Counter Chinese Mineral Dominance

Two massive sandlike dunes in Phalaborwa, South Africa have become the focal point of an ambitious U.S.-backed initiative to extract valuable rare earth elements from industrial mining waste. The project represents a strategic move in the growing global competition for critical minerals.

The Phalaborwa Rare Earths Project has secured a substantial $50 million equity investment from the U.S. International Development Finance Corporation (DFC). This support is part of accelerated American efforts to reduce dependence on China, which currently dominates the global supply of rare earth elements crucial for manufacturing high-tech products including electronic devices, robotics, defense systems, and electric vehicles.

The 17 rare earth elements form a critical subset of dozens of minerals identified as essential for emerging technologies. Their strategic importance has prompted President Donald Trump to make expanding U.S. access to these resources a central policy objective in countering Chinese influence. Earlier this year, the Trump administration announced plans to deploy nearly $12 billion to establish an American strategic mineral reserve.

While the DFC was created during Trump’s first administration, the commitment to the Phalaborwa project came in 2023 under the Biden administration. Notably, the current Trump administration has continued supporting the project despite a significant diplomatic rift with South Africa that began when Trump returned to office and issued an executive order halting financial assistance to the country. This continuation underscores how certain economic and strategic interests transcend broader diplomatic tensions.

The Phalaborwa project is being developed by Rainbow Rare Earths, with the DFC’s investment flowing through TechMet, a company focused on securing critical mineral supplies for Western nations. The South African government does not hold a direct stake in the venture.

George Bennett, CEO of Rainbow Rare Earths, told The Associated Press that the company aims to primarily supply the United States, noting that American interest in the project is largely related to defense systems. The company plans to extract neodymium, praseodymium, dysprosium, terbium, and other rare earth elements used in high-performance magnets for wind turbines, electric vehicles, defense systems, and emerging technologies like robotics.

The project takes an innovative approach by targeting 35 million tons of phosphogypsum—a byproduct of mining waste and phosphate rock processing for acid and fertilizer production. Production is expected to begin in 2028, with operations continuing for approximately 16 years. The $50 million from the DFC will be deployed once Rainbow Rare Earths commences construction of its processing factory in Phalaborwa, anticipated in early 2027.

Despite their name, rare earth elements are relatively common in the Earth’s crust but typically occur at low concentrations, making extraction technically challenging and costly. This has contributed to China’s dominance in the sector, as the country developed extraction capabilities while other nations neglected this strategic resource.

Neha Mukherjee, research manager at Benchmark Mineral Intelligence, described the Phalaborwa project as unique due to its experimental above-ground mineral extraction process. “It looks like a fairly low-cost asset in terms of operational cost,” she said. “Even the capital requirement is not very high, which is a good sign.” Mukherjee emphasized the project’s importance, noting that “we do not have enough projects to meet the entire demand outside of China.”

Rainbow Rare Earths claims their extraction method will use up to 90% renewable energy and be significantly less expensive than conventional rare earth mining. Bennett believes Phalaborwa will become a low-cost producer comparable to Chinese operations. Project director Alberto Bruttomesso explained that much of the expensive processing has already been done when creating the phosphogypsum waste: “Heating is the most expensive part of the process. It’s what costs the most money.”

The Trump administration has also invested in critical mineral mining within the United States and pursued deals to secure access abroad, including in Ukraine. Trump’s interest in acquiring Greenland was partly motivated by the island’s rare earth deposits.

The Phalaborwa project is one of several mineral initiatives in Africa receiving DFC investment. Patience Mususa, a mining specialist at the Nordic Africa Institute in Sweden, observed that the U.S. is “trying to catch up in terms of investment in mining” on the African continent, where China has established itself as the dominant player.

American efforts to secure critical minerals in Africa extend beyond South Africa. In February, the U.S. Trade and Development Agency provided $1.8 million for a feasibility study at the Monte Muambe rare earths project in Mozambique. The Trump administration is also continuing U.S. financial support for the Lobito Corridor, an initiative to build an 800-mile railway linking mineral-rich regions of Congo and Zambia to Africa’s Atlantic coast.

These investments reflect growing recognition that securing supply chains for critical minerals has become essential for economic security and technological leadership in the 21st century.