The United States is pouring $50 million into an experimental rare earths mining project in South Africa even as the Trump administration has frozen all financial assistance to the country, raising questions about how strategic mineral interests are reshaping development priorities and diplomatic relationships across Africa.
The International Development Finance Corporation, a government agency, committed the investment in the Phalaborwa Rare Earths Project in the third year of its existence. The project aims to extract rare earth elements—used in electric vehicles, wind turbines, defense systems, and robotics—from industrial mining waste at an old chemical processing plant. Yet this investment comes after the Trump administration issued an executive order last February halting all financial assistance to South Africa, signaling that access to critical minerals takes precedence over broader development partnerships.
The Strategic Mineral Race
The Phalaborwa project represents a centerpiece of the Trump administration's effort to reduce U.S. reliance on China for minerals essential to modern technology and defense. President Trump has made expanding U.S. access to critical minerals a central policy, with the administration committing nearly $12 billion this year to create its own strategic reserve. The administration has framed the DFC's involvement as unlocking "Africa's mineral potential while advancing U.S. strategic interests"—language that reveals how geopolitical competition is reshaping investment patterns on the continent.
The project is being developed by Rainbow Rare Earths in partnership with TechMet, a company focused on securing critical mineral supplies for Western nations. South Africa's government holds no direct stake in the project, meaning local communities and the national economy may see limited benefit from resource extraction on their soil. Rainbow Rare Earths CEO George Bennett acknowledged that U.S. interest in the project was "largely related to defense systems," underscoring that military and technological dominance, rather than development outcomes, drives the investment.
Who Extracts the Value
The Phalaborwa project targets extraction of neodymium, praseodymium, dysprosium, terbium, and other rare earth elements from two massive dunes containing 35 million tons of phosphogypsum—a byproduct of mining waste. The company says it aims to start extracting rare earths in 2028, with operations expected to continue for 16 years. Construction of the processing factory is anticipated to begin in early 2027, at which point the DFC's $50 million investment will be deployed.
Research manager Neha Mukherjee at Benchmark Mineral Intelligence noted that the Phalaborwa project is "unique" with its experimental above-ground mineral extraction process, though "its potential remains unknown." She emphasized that the project matters because "we do not have enough projects to meet the entire demand outside of China," framing the investment as a necessity rather than an optimal development choice. The company claims the operation will use up to 90% renewable energy and be significantly less expensive than typical rare earth mining, positioning it as a low-cost alternative to Chinese producers.
Broader African Mineral Strategy
The Phalaborwa investment is one of several mineral projects in Africa receiving DFC support as the U.S. attempts to establish itself as a serious competitor to China's dominant role in African mining. In February, the U.S. Trade and Development Agency signed a formal agreement to provide $1.8 million for a feasibility study at the Monte Muambe rare earths project in Mozambique. Patience Mususa, a mining specialist at the Nordic Africa Institute in Sweden, observed that the U.S. was "trying to catch up in terms of investment in mining" on the African continent.
Beyond rare earths, the Trump administration is also continuing U.S. financial support for the Lobito Corridor, a Biden administration initiative to build an 800-mile railway linking mineral-rich regions of Congo and Zambia to Africa's Atlantic coast. The administration has similarly pursued critical mineral deals in Ukraine and has sought access to Greenland's rare earths deposits. This pattern reveals how mineral security is reshaping U.S. foreign policy and development assistance priorities globally.
Why This Matters:
The Phalaborwa investment illustrates a growing tension in development finance: strategic mineral access is increasingly driving U.S. engagement with African nations, potentially sidelining broader concerns about local benefit-sharing, environmental protection, and equitable development. That the U.S. is investing $50 million in South Africa's mineral wealth while simultaneously freezing development assistance to the country suggests that geopolitical competition with China takes precedence over consistent partnership or accountability frameworks. For African nations, this pattern raises concerns about whether mineral-rich countries will see genuine development gains or simply become extraction sites for Western strategic interests. The concentration of rare earth supply chains outside China remains a legitimate security concern, but the structure of these investments—with foreign companies holding stakes while host governments lack direct participation—may limit the benefits that flow to local communities and national economies. How the U.S. structures these mineral partnerships will signal whether development finance serves mutual benefit or primarily serves great power competition.