An exploratory project, backed by the US, aims to tap rare earth elements from industrial mining waste in two huge sand-like dunes at a former chemical processing plant in South Africa.
The Phalaborwa Rare Earths Project has US support by means of a USD 50 million equity investment from the International Development Finance Corporation of the government and is part of fast-tracked US efforts to cut dependence on economic rival China for the minerals needed to make electronic gadgets, robots, defence systems, and electric vehicles as well as other high-tech products.
Countries have designated dozens of minerals, such as copper, cobalt, and lithium as well as nickel, as critical because they are needed for new technologies. There are 17 rare earth elements. They are a subset of 17 rare earth elements.
Increasing access to critical minerals, including rare earth elements, has become a key Trump administration policy so as to counter China. The Trump administration announced in 2026 that it would use almost USD 12 billion so as to create its own strategic reserve.
Diplomatic rift will not derail the project
The DFC was established during the first Trump administration and invested in the Phalaborwa project in 2023 under former President Joe Biden.
The Trump administration has moved forward with the project, regardless of a major diplomatic rift with South Africa that started when Trump returned to office and went ahead and issued an executive order in February 2025 to stop any financial support to the country.
But the administration has demonstrated that some economic interests are more important. The DFC has promoted its work on the Phalaborwa project as part of a throttle to unlock the mineral potential of Africa while also advancing the US strategic interests.
It is well to be noted that Rainbow Rare Earths is developing the Phalaborwa project. The DFC investment is made via partner TechMet, which is a company that says it focuses on securing critical mineral supplies for the West. Apparently, the South African government has no ownership stake in the project.
George Bennett, CEO of Rainbow Rare Earths, told The Associated Press they hope to provide mostly to the US, saying its interest in the project was primarily to do with defence systems.
The company says it is targeting to tap rare earth elements including neodymium, praseodymium, dysprosium, and terbium as well as others from its South African project. They are utilised in high-performance magnets when it comes to wind turbines, electric vehicles, and defence as well as emerging applications like robotics.
The Phalaborwa project is aiming to produce rare earths from the two giant dunes by 2028. The dunes are made up of 35 million tonnes of phosphogypsum, which happens to be a waste byproduct from mining and processing phosphate rock in order to make acid and fertiliser.
Rainbow Rare Earths said the project would have a 16-year lifespan. The DFC’s $50 million injection will be used only when Rainbow Rare Earths commences the construction of its processing plant in Phalaborwa, which is projected to be in early 2027.
Rare earths are actually pretty common, but they tend to be in low levels and are difficult to separate, so the mining process is costly.
According to the research manager at Benchmark Mineral Intelligence, Neha Mukherjee, the Phalaborwa project stands out due to its experimental above-ground mineral extraction process, however its potential is a mystery. It looks like a pretty low-cost asset as far as operational cost is concerned. Even the capital requirement is not that high, which is indeed a good sign.
The project matters because they do not have enough projects to meet the full demand outside of China, Mukherjee said.
The US is trying to catch up
Rainbow Rare Earths says the extraction of the mineral from the dunes will be almost 90% renewable energy and far cheaper than common rare earth mining.
Phalaborwa could as well be a low-cost producer like Chinese producers, said Bennett.
“They went ahead and crushed it and milled it, and they put energy and heat into it – all that to make the phosphogypsum, which is what is required to make rare earths,” said Alberto Bruttomesso, the project director with Rainbow Rare Earths, referring to the procedures that the waste had previously passed through. The heating is the most costly part of the process, and it is indeed the most expensive thing.
It is well to be noted that the Trump administration has also invested in critical mineral mining in the US and has been looking for deals to guarantee access to these minerals abroad, such as in Ukraine. Greenland’s rare earths are part of why Trump has sought to buy the Arctic island.
The Phalaborwa project is one of a number of mineral projects located in Africa that DFC has an investment in.
The US is indeed trying to catch up in terms of investment in mining across the African continent, where China has been a dominant player in mining, said a mining specialist with the Nordic Africa Institute in Sweden, Patience Mususa.
The US Trade and Development Agency executed a formal agreement in February 2026 so as to provide USD 1.8 million for a feasibility evaluation at the Monte Muambe rare earths project located in Mozambique.
In Africa, the Trump administration also continues to provide US financial support for the Lobito Corridor, which apparently is a Biden administration project so as to build an 800-mile, or a 1,290-kilometre, railway that connects the mineral-rich parts of Congo and Zambia to the Atlantic coast of Africa.