The United States government's International Development Finance Corporation (DFC) has committed a $50 million equity investment to the Phalaborwa Rare Earths Project in South Africa, an exploratory venture aimed at extracting critical minerals from industrial mining waste. This investment, channeled through partner TechMet, serves to secure raw materials for Western capital and defense systems, while South Africa's government holds no direct stake in the project.
The investment is part of accelerated U.S. efforts to reduce reliance on China for minerals essential to electronic devices, robotics, defense systems, electric vehicles, and other high-tech products. President Donald Trump has made expanding U.S. access to critical minerals, including rare earth elements, a central policy to counter China, with his administration planning to deploy nearly $12 billion to create its own strategic reserve.
The State as Capital's Enforcer
The DFC, created during the first Trump administration, committed its investment in the Phalaborwa project in its third year, under former U.S. President Joe Biden. The current Trump administration has advanced the project despite issuing an executive order last February to halt all financial assistance to South Africa, explicitly stating that "certain economic concerns come first." This demonstrates the state's primary function in protecting and advancing capital accumulation, even at the expense of diplomatic relations or broader aid.
Rainbow Rare Earths, the project developer, aims to supply predominantly the U.S., with CEO George Bennett noting its interest was largely related to defense systems. TechMet, the DFC's partner, states its focus is on securing critical mineral supplies for the West. The DFC has promoted its involvement in the Phalaborwa project as part of a push to unlock Africa’s mineral potential "while advancing U.S. strategic interests."
Profits from African Waste
The project targets 35 million tons of phosphogypsum, a byproduct of mining waste and phosphate rock processing, located at two enormous sandlike dunes at an old chemical processing plant in Phalaborwa. Neha Mukherjee, research manager at Benchmark Mineral Intelligence, described the project as a "fairly low-cost asset in terms of operational cost" with a "not very high" capital requirement, indicating high potential for surplus extraction. Rainbow Rare Earths CEO George Bennett stated Phalaborwa would be a low-cost producer comparable to Chinese producers, often a euphemism for suppressed labor costs and minimal environmental overhead.
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, and robotics. The project is expected to operate for 16 years, with construction of the processing factory anticipated in early 2027 and extraction aiming to start in 2028. The $50 million DFC injection will be released only once construction begins.
Imperial Resource Grab Across Africa
The Trump administration's pursuit of critical minerals extends beyond South Africa, including investments in U.S. mining, deals in Ukraine, and attempts to acquire Greenland. Patience Mususa, a mining specialist at the Nordic Africa Institute, observed that the U.S. is "trying to catch up in terms of investment in mining" on the African continent, where China currently dominates. In February, the U.S. Trade and Development Agency signed an agreement for a $1.8 million feasibility study at the Monte Muambe rare earths project in Mozambique.
Further demonstrating the U.S. commitment to securing African resources for capital, the Trump administration is continuing financial support for the Lobito Corridor, a Biden administration initiative to build an 800-mile (1,290-kilometer) railway. This railway is designed to link mineral-rich regions of Congo and Zambia to Africa’s Atlantic coast, facilitating the efficient extraction and export of raw materials for transnational corporations.