The U.S. Development Finance Corporation (DFC) has committed $62.8 million to rare-earth projects in Malawi, Angola, Madagascar, and South Africa, with $50 million allocated to the Phalaborwa project in South Africa, according to sources. None of the projects have reached production yet, and private capital remains hesitant due to risks and oversupply concerns.
The U.S. Development Finance Corporation (DFC) has committed $62.8 million to rare-earth projects in four African countries, marking a significant step in the agency’s effort to diversify global supply chains and reduce reliance on China. The funding, announced by the DFC on the 19th, targets Malawi, Angola, Madagascar, and South Africa, with $50 million directed to the Phalaborwa project in South Africa, backed by Dublin-based mining firm TechMet. However, none of the projects have yet reached the production stage, highlighting the challenges of developing Africa’s rare-earth sector.
Funding Breakdown and Project Details
The DFC’s $62.8 million investment, equivalent to approximately ¥10 billion, is part of a broader strategy to bolster critical minerals supply chains. The Phalaborwa project, which accounts for the bulk of the funding—$50 million (about ¥7.9 billion)—remains in the development phase, with the agency emphasizing its role in de-risking projects to attract private-sector investment. The remaining amount is distributed across initiatives in Malawi, Angola, and Madagascar, though specific details about these projects are limited in the available sources.
The DFC’s commitment aligns with U.S. efforts to counter China’s dominance in rare-earth production. China is the world’s largest rare-earth producer and has progressively tightened related export controls over the past several years. The United States is working with Western allies to diversify the critical minerals supply chain concentrated in China by leveraging the DFC more aggressively. The agency’s involvement is particularly critical in Africa, where private capital alone struggles to finance high-risk ventures, according to a DFC official.
Private Capital’s Cautious Stance
Despite the DFC’s efforts, private investors remain wary of African rare-earth projects. Two DFC officials told Reuters that private investors remain reluctant to invest in African rare-earth ventures. One DFC official explained that African rare-earth projects carry high risk, and that Chinese market intervention could undermine prices and project profitability, keeping private investors cautious. We are not seeing signs of private capital flowing in,
the official said, adding, We are trying to help de-risk projects and make them attractive for private-sector investment.
Africa accounts for approximately 20–25% of the DFC’s global investment portfolio. Particularly in Africa, where private capital alone struggles to advance projects, the DFC is seeking to play a role in reducing project risk to a level where private funding can enter. Concerns over oversupply Meanwhile, voices within the industry have questioned the profitability of rare-earth projects themselves. Olympia Filich, strategy director at Critical Minerals Africa, an African critical minerals lobby group, pointed out that the number of rare-earth projects being announced far exceeds demand for neodymium-praseodymium (NdPr) magnets.
While supply projects are being planned one after another, it remains unclear whether sufficient demand can be secured to support them. Among analysts, there is a growing view that many of the planned rare-earth projects lack clear profitability prospects and that investor interest remains limited.
Strategic Implications and Next Steps
The DFC’s investment underscores the U.S. focus on securing critical minerals for industries like electric vehicles, wind turbines, and defense systems. However, the agency’s role as a catalyst for private capital remains unproven. With none of the funded projects in production, the timeline for meaningful supply-chain impact is unclear. The DFC has stated that considerable time and additional funding
will be required before the projects contribute to global supply chains.
The agency’s strategy also faces geopolitical risks. Chinese export controls and market interventions could undercut the profitability of African projects, complicating the DFC’s mission. As the U.S. seeks to reshape global supply chains, the outcome of these investments will serve as a critical test of its ability to balance risk, demand, and strategic priorities in the rare-earth sector. The U.S. is working with Western allies to diversify the critical minerals supply chain concentrated in China by leveraging the DFC more aggressively.
