A U.S.-backed rare earths project in South Africa is moving ahead despite worsening political tensions between Washington and Pretoria, underscoring how critical minerals have become a strategic priority in the global race to reduce dependence on China. The project, based in Phalaborwa in South Africa’s Limpopo province, is supported by a $50 million U.S. International Development Finance Corporation investment and is designed to recover rare earth elements from vast stacks of phosphogypsum waste left by an old chemical processing plant.
The Phalaborwa Rare Earths Project is being developed by Rainbow Rare Earths, which says it will extract high-value minerals including neodymium, praseodymium, dysprosium and terbium from about 35 million tonnes of phosphogypsum. Unlike conventional rare earth mining, the company says the project will effectively combine mineral recovery with environmental clean-up, using material that has already been mined, crushed and chemically processed in the past. Rainbow says the project is expected to begin production in 2028 and operate for about 16 years.
The investment reflects a broader U.S. effort to secure critical minerals needed for electronics, robotics, electric vehicles, renewable energy systems and defence technologies. Rare earths are a subset of critical minerals but are particularly prized because they are essential in high-performance magnets used in fighter jets, submarines, missiles, wind turbines and electric motors. The DFC has described its support for the South African venture as part of a push to unlock Africa’s mineral potential “while advancing U.S. strategic interests.”
That backing is notable because it is continuing even after President Donald Trump’s administration froze broader U.S. financial assistance to South Africa earlier this year. The persistence of the Phalaborwa deal suggests that mineral security is overriding diplomatic friction, with Washington increasingly willing to separate strategic supply-chain investments from political disputes.
Rainbow says the project could also be cheaper and greener than traditional mining, with up to 90 percent of its energy expected to come from renewable sources. Still, analysts caution that the operation remains unusual and partly experimental because it relies on above-ground extraction from industrial waste rather than standard ore mining. That makes its long-term performance harder to predict, even if its potential is significant.
The South African venture is part of a wider U.S. push across Africa. In February, the U.S. Trade and Development Agency signed a funding agreement for a pre-feasibility study at the Monte Muambe rare earths project in Mozambique, while Washington also continues to support the Lobito Corridor, a major rail and logistics route aimed at moving minerals from central Africa to the Atlantic coast. Together, the projects show that the contest for critical minerals is becoming one of the defining geopolitical struggles of the energy and technology era.
