US Backs Madagascar Rare Earths Project to Counter China's Supply Chain Dominance

The United States is financially backing a rare earths project in Madagascar, a strategic move designed to diversify critical mineral supply chains and reduce reliance on China. The U.S. International Development Finance Corporation (DFC) has committed funds to the Ampasindava project, signaling Washington's growing effort to secure materials vital for defense, clean energy, and high-tech manufacturing.

A Strategic Investment

The DFC has committed up to $4.48 million to the project's owner and developer, London-listed Harena Rare Earths, the company announced last week. According to Harena, the initial funds will support pilot plant operations, laboratory testing, and environmental programs for the project, which is estimated to cost roughly $150 million to bring into full production.

While the initial commitment is modest, Harena's Executive Chair, Andrew Murphy, told Reuters it could pave the way for more substantial U.S. backing. A State Department spokesperson confirmed the investment aligns with Washington's strategy to counter "opaque, predatory investments from our adversaries" by increasing U.S. and allied investment in Africa's critical mineral sector.

Loosening China's Grip

The investment directly challenges China's long-held dominance in the global mining and processing of rare earth elements. These minerals are essential components in a wide range of advanced technologies, including:

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• Permanent magnets for electric vehicles and wind turbines
• Electronics and consumer goods
• Critical defense applications, such as fighter jets and precision-guided missile systems

By supporting projects like Ampasindava, the U.S. aims to build more resilient and secure supply chains, mitigating risks associated with China's use of export controls on these strategic materials.

Project Outlook and Potential

The Ampasindava deposit is an ionic clay project rich in high-value magnet materials, including neodymium, praseodymium, dysprosium, and terbium. Harena Rare Earths aims to begin production by mid-2028, pending the receipt of an exploitation permit from the Madagascan government.

The company projects an annual output of approximately 4,000 metric tons of rare earth oxides, with 1,700 tons of that being the crucial magnet materials. Harena is reportedly evaluating processing and refining partners in the U.S. and Europe, naming potential collaborators such as MP Materials, USA Rare Earths, and Solvay.