South Africa’s development finance institution is investing $20 million in a local rare earths project to support the European Union’s efforts to lessen dependence on China for critical minerals.
The state-owned Industrial Development Corporation (IDC) has thrown its support behind Frontier Rare Earths Ltd.’s Zandkopsdrift project in South Africa’s Northern Cape, the Luxembourg-registered company announced on Thursday.
The European Union, seeking to bolster its critical minerals supply chains, designated the project as a strategic asset last year.
IDC’s investment will fund a definitive feasibility study for the Zandkopsdrift mine, which is expected to produce rare earth elements and battery-grade manganese starting in 2030. Frontier did not disclose the size of IDC’s stake in the project.
Global push to reduce reliance on China
China remains the dominant player in processing and refining rare earth elements, which are essential for permanent magnets used in smartphones, drones, electric vehicle motors, and wind turbines.
In response, the EU, the U.S., and other major economies are accelerating efforts to establish alternative sources of supply.
According to reports, African mines could account for nearly 10% of global rare earth production within five years, up from almost zero today, introducing new competitors into a market long controlled by China.
Frontier is exploring several potential EU funding options for the project and has signed an agreement with Carester SAS, which will implement proprietary extraction technology at the mine and process part of the output at a separation facility currently under construction in France.
IDC’s portfolio in the mining and metals sector includes holdings in Kumba Iron Ore, ArcelorMittal South Africa, and Merafe Resources.