US Backs South Africa Rare Earths Project Despite Diplomatic Tensions

A U.S.-backed project in South Africa is moving ahead despite diplomatic tensions, underscoring the strategic importance of critical minerals in the global economy. The initiative, centred on the Phalaborwa Rare Earths Project, aims to extract rare earth elements from industrial waste, positioning South Africa within a rapidly evolving supply chain race.

Located in Limpopo, the project focuses on processing phosphogypsum—an industrial byproduct from earlier mining activity—into valuable rare earth elements. These minerals, including neodymium and praseodymium, are essential for technologies such as electric vehicles, wind turbines, defence systems and advanced electronics.

The project has secured a $50 million equity investment from the U.S. International Development Finance Corporation, signalling Washington’s growing push to diversify supply chains away from China, which currently dominates global rare earth production.

The investment aligns with broader policy priorities under Donald Trump, whose administration has made securing access to critical minerals a strategic objective. The United States is seeking to reduce reliance on external suppliers by supporting projects both domestically and internationally, particularly in resource-rich regions like Africa.

Despite a diplomatic rift between the U.S. and South Africa, the project has continued to receive backing. This reflects a pragmatic approach where economic and strategic interests—especially around energy transition minerals—are prioritised over political disagreements.

The Phalaborwa development is being led by Rainbow Rare Earths in partnership with TechMet, a firm focused on securing supply chains for Western markets. The project is expected to begin production around 2028, with a projected lifespan of approximately 16 years.

One of its distinguishing features is its focus on extracting minerals from existing waste rather than traditional mining. This approach could lower costs and reduce environmental impact. The operation is also expected to rely heavily on renewable energy, potentially making it more sustainable than conventional rare earth extraction processes.

Industry analysts note that while the project shows promise, its long-term output remains uncertain. However, its importance lies in expanding supply options outside of China, particularly as global demand for critical minerals continues to rise.

The initiative also reflects intensifying competition for Africa’s mineral resources. The U.S. is increasing its presence on the continent, seeking to counterbalance China’s longstanding dominance in mining and infrastructure investment.

Beyond South Africa, Washington has supported other projects across Africa, including feasibility studies in Mozambique and infrastructure initiatives such as the Lobito Corridor, which aims to improve mineral export routes from Central Africa to global markets.

For South Africa, the project represents both an economic opportunity and a strategic positioning within global supply chains. For the U.S., it is part of a broader effort to secure critical inputs for future industries. And for the global market, it signals that competition over minerals essential to the energy transition is only intensifying.