South Africa rare earths project gets $20 million in state funds

South Africa’s development finance institution has invested $20 million in a domestic rare earths project, which aims to help the European Union reduce its dependence on China for critical minerals.

The state-owned Industrial Development Corp. is backing Frontier Rare Earths Ltd.’s Zandkopsdrift project in the Northern Cape province, the Luxembourg-registered company said in a statement on Thursday. The EU, which is working to strengthen its critical minerals supply chains, designated the asset as a strategic project last year.

The IDC’s equity investment is funding a definitive feasibility study for Zandkopsdrift, which aims to produce rare earth products and battery grade manganese from 2030, Frontier said. The statement didn’t disclose the size of IDC’s shareholding.

China currently dominates the processing and refining of rare earth elements which are found in permanent magnets used in everything from smartphones, drones, electric vehicle motors and wind turbines. The US, EU and others are trying to develop alternative sources of supply.

Frontier said that “multiple potential EU funding pathways” are “under evaluation” for Zandkopsdrift. The company also said it has signed an agreement with Carester SAS, which will deploy proprietary extraction technology at the mine and process some of the future offtake at a separation plant being built in France.

Revenue generated by the manganese byproduct means Zandkopsdrift is “expected to be the lowest cost producer of rare earths outside China,” Frontier chairman Philip Kenny said in the statement.

The investment in Frontier’s local subsidiary “reflects our mandate to support projects that advance Southern Africa’s industrialization and critical minerals strategy,” Rian Coetzee, IDC’s executive for industrial planning and project development, said in the statement.

The IDC has other investments in the mining and metals sector in companies including Kumba Iron Ore Ltd., ArcelorMittal South Africa Ltd. and Merafe Resources Ltd.

(By William Clowes)