The United States is investing $50 million in an experimental South African project designed to extract rare earth elements from mining waste, a central element of the Trump administration’s strategy to reduce American reliance on Chinese supplies of minerals critical for defense systems, electronics, and electric vehicles.
The move, through the U.S. International Development Finance Corporation, represents an accelerated push by the Trump administration to secure access to critical minerals worldwide, a declared priority to counter China’s dominance in the sector. The Phalaborwa Rare Earths Project aims to begin commercial extraction in 2028 using an experimental process that would make the venture significantly cheaper to operate than traditional rare earth mining.
The Project: Extracting Rare Earths from Waste
In Phalaborwa, South Africa, a $50 million U.S.-backed venture aims to unlock rare earth elements from 35 million tons of phosphogypsum, the byproduct of decades of phosphate mining and chemical processing. The Phalaborwa Rare Earths Project plans to begin extracting these minerals in 2028 from two enormous sandlike dunes at the site of an old chemical processing plant.
The operation takes an unconventional approach to rare earth production: rather than mining fresh ore, the project draws on waste already removed from the earth. Project director Alberto Bruttomesso explained the cost advantage: “They crushed it, they milled it, they put energy into it, put heat into it, all that to make the phosphogypsum, which is what’s needed to make rare earths. Heating is the most expensive part of the process. It’s what costs the most money.”
The rare earth elements—including neodymium, praseodymium, dysprosium, and terbium—are essential for high-performance magnets in wind turbines, electric vehicles, defense systems, and emerging robotics applications.
U.S. Investment and Strategic Intent
The International Development Finance Corporation, a U.S. government agency, has committed $50 million in equity investment to the project, deploying funds once factory construction begins in early 2027. The DFC is channeling its investment through TechMet, a company specializing in securing critical mineral supplies for Western markets. South Africa’s government holds no direct stake in the venture.
Rainbow Rare Earths, the company developing the project, has stated its primary aim is supplying the United States. CEO George Bennett told the Associated Press that the project’s appeal “was largely related to defense systems.” The company says production is designed to use up to 90 percent renewable energy and produce rare earths at costs comparable to Chinese suppliers.
A Trump Policy Priority
The Trump administration’s support for Phalaborwa is part of its strategy to reduce U.S. dependence on China for critical minerals. This year, the administration committed nearly $12 billion toward creating a domestic strategic reserve of these materials. The DFC itself was established during the first Trump administration, though its Phalaborwa commitment was made in 2023 under former President Joe Biden.
The continued support reflects the administration’s emphasis on mineral security. In February 2025, the Trump administration issued an executive order halting all U.S. financial assistance to South Africa over unrelated policy disputes. Despite this diplomatic rift, the Phalaborwa investment has continued—underscoring the administration’s prioritization of mineral security over broader geopolitical tensions.
Market Assessment and Broader Engagement
Neha Mukherjee, research manager at Benchmark Mineral Intelligence, assessed the project as unique but with potential still unknown. “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 broader importance: “We do not have enough projects to meet the entire demand outside of China.”
Patience Mususa, a mining specialist at the Nordic Africa Institute, described the U.S. position in Africa’s mineral sector as reactive. The U.S. is “trying to catch up in terms of investment in mining” on the African continent, Mususa said, “where China is the dominant player in mining.”
Phalaborwa is one of several mineral projects in Africa receiving DFC backing. In February 2026, 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 earth project in Mozambique.
The administration is also continuing support for the Lobito Corridor, an 800-mile railway designed to link mineral-rich regions of Congo and Zambia to Africa’s Atlantic coast. The infrastructure project, initiated under the Biden administration, remains part of the broader U.S. strategy to develop alternative supply chains for critical minerals independent of China.