The United States government, through the Development Finance Corporation ("DFC"), is backing a South African rare earth mine (TechMet Ltd.) with a $50 million investment. The project is referred to as Phalaborwa Rare Earth Project and a U.S. Congressional staff delegation visited the site this week. The mine should begin production in 2026.
Phalaborwa is poised to become the world's largest low-cost producer of rare earth oxides, and the mine's advantage is it has readily accessible above-ground phosphogypsum piles. The deposits contain rich concentrations of neodymium, praseodymium, dysprosium, and terbium which are essential for building electric vehicles, wind turbines, and other clean energy technologies. Once mined the rare earth oxides will be separated domestically instead of being sent to China for further refinement which is the case with most other rare earth mining operations.
The DFC was formed in 2019 folding together OPIC and other similarly situated organizations. It can be seen as the sovereign wealth arm of the U.S. government and this investment shows it is ready to put money on the table to compete with China for influence over global minerals, especially those important to the energy transition presently underway. It has invested over $1 billion previously in mining operations including in lithium, tantalum, and cobalt mines.
The investment was pushed through DFC's investment committee under Adam Boehler, a previous DFC CEO who summarized the investment vision as follows:
"The DFC is proud to support projects like Phalaborwa that are advancing a clean energy future while creating jobs and economic opportunities in developing countries."
U.S. Ambassador to South Africa Reuben Brigety also commented remarking that,
"This project represents a landmark collaboration between the U.S. and South Africa, demonstrating our joint commitment to securing critical minerals for the clean energy transition and building a more resilient global supply chain."
While not directly connected to the Lobito Corridor, the Phalaborwa project and the Lobito Corridor represent different pieces of a larger U.S. strategic puzzle in Africa, aiming at resource security, economic development, and fostering stronger partnerships on the continent.
