US Funds $62.8M in African Rare Earths

The US International Development Finance Corporation (DFC) has committed $62.8 million to rare-earth projects in Malawi, Angola, Madagascar, and South Africa. This move is part of the US effort to reduce dependence on China for rare earths, which are essential for magnets used in electric vehicles, wind turbines, and defense systems.

About $50 million of the funding is allocated to the Phalaborwa project in South Africa, backed by Dublin-based mining investor TechMet. The DFC announced the funding commitment on August 19, highlighting the agency's efforts to support the development of Western-aligned supply chains for critical minerals.

Private investors remain largely unwilling to fund African rare-earth projects due to their higher risk profile and concerns about Chinese market intervention. The DFC's investment is aimed at helping these projects reach a more de-risked stage, making them more attractive for private-sector investment.

Africa accounts for roughly 20-25% of the DFC's global investment portfolio, demonstrating the region's strategic importance in the US's efforts to diversify its supply chains. Rare earths are crucial for various industries, including electric vehicles, wind turbines, and defense systems, and China's dominance in the global supply chain has raised concerns about export controls and market intervention.

## Why it matters The US's investment in African rare earths is significant, as it aims to reduce dependence on China, which has tightened export controls over the past couple of years. The development of Western-aligned supply chains for critical minerals is crucial for the US's economic and national security interests. The DFC's funding commitment is a step towards achieving this goal, and it will be important to monitor the progress of these projects and their potential impact on the global rare earth market.

The DFC's efforts to support African rare-earth projects also highlight the challenges faced by these projects in attracting private investment. The higher risk profile and concerns about Chinese market intervention have made it difficult for these projects to secure funding, and the DFC's investment is aimed at addressing these challenges. As the global demand for rare earths continues to grow, the development of new supply chains and the diversification of existing ones will be critical for ensuring the stability of the global market.