South Africa’s development finance organization has committed $20 million to a domestic rare earths project that will help the European Union lessen its reliance on China for crucial minerals.
Frontier Rare Earths Ltd.’s Zandkopsdrift project in the Northern Cape will be backed by the state-owned Industrial Development Corp. (IDC), the Luxembourg-registered firm announced on Thursday.
Last year, the European Union recognized the project as a strategic asset as part of its efforts to enhance vital minerals supply chains.
The IDC’s equity investment will help fund a formal feasibility study for Zandkopsdrift, which is planned to generate rare earth goods and battery-grade manganese by 2030. Frontier did not specify the size of IDC’s stake.
China presently controls the processing and refining of rare earth elements, which are utilized in permanent magnets in smartphones, drones, electric vehicle motors, and wind turbines.
The European Union, the United States, and other economies are rushing to create alternate sources of supplies.
African mines might produce roughly 10% of global rare earth output within five years, up from almost nothing today, bringing new participants into a sector long dominated by China.
Frontier stated that it is exploring numerous potential EU funding streams for the project and has inked an agreement with Carester SAS, which will use proprietary extraction technology at the mine and process a portion of the future production at a separation plant under development in France.
The IDC also holds investments across the mining and metals sector, including Kumba Iron Ore, ArcelorMittal South Africa and Merafe Resources.