By Jackson Okata
When Donald Trump returned to the White House on January 20, 2025, as U.S. President, it was clear that he would live up to his campaign promise of putting America first. He started by issuing and signing executive orders, some of which shocked the world. There was no doubt that most African countries would suffer the consequences of Trump’s actions, like aid freezes and increased trade tariffs.
South Africa, in particular, has been among the African nations targeted by Trump’s actions. On February 7, 2025, President Trump issued an executive order suspending all U.S. assistance to South Africa over alleged land expropriation policies. According to stakeholders, the move may impact capital investment projects, including the Phalaborwa rare earth project.
Back in December 2023, the US, through its International Development Finance Corporation (DFC), announced a $50 million investment in the Phalaborwa project.
Taming China Control
The US investments in the Phalaborwa rare earth venture were meant to diversify supply chains away from China. According to the US Geological Survey, China mines 70% of global rare earth concentrates and controls 91% of refined rare earth minerals output.
Joseph Hwata, a consultant geologist, argues that by withdrawing from Phalaborwa, the US has backtracked on its quest to break the Chinese dominance and control of the rare earth supply chains.
“The freezing of funding is not just the loss of capital but a reputational hit for Washington because this was a project with international credibility”, said Hwata.
According to TechMet South Africa, the project encountered delays in permitting, inconsistencies in policy interpretation, and at times overlapping mandates between national and provincial regulators. These challenges affect timelines and project costs.
A 2024 interim economic assessment by Rainbow Rare Earths estimated Phalaborwa’s annual production capacity at 1,900 tonnes of magnet rare earth oxides.
Michael Hart, a Johannesburg-based mining analyst, describes the Limpopo-based rare earth project as “the single most advanced, internationally credible rare earth venture in Southern Africa”.
“This is a very strategic project that is staring at death, courtesy of geopolitics. Phalaborwa has the potential of providing the globe with a reliable source of rare earth minerals, but now work has stalled and the equipment is gathering dust in Limpopo,” said Hart.
Investor Scare
Karen Willis, a London-based resource sector fund manager, said “the abandonment of the project not only causes uncertainty but also destabilises the markets and scares away investors”.
“We are not only talking about job and investment losses for South Africans but also staring at huge economic setbacks directly and indirectly’’ said Willis.
Stakeholders have warned that with the US’s withdrawal as an anchor investor of the project, it will be hard to attract replacement financing owing to the high capital costs and investor insecurities.
“The sudden withdrawal of the US from the project is likely to scare potential investors, particularly from Europe and Asia, who might not be keen to inherit any economic baggage being left behind by Washington”, said Andzani Ndhukwani, an exploration geologist, based in Gauteng
Ndhukwani wonders why the US would sabotage a project that would have changed the overreliance on Chinese rare earths, something it has been warning the world against.
He regrets that the project “has become a casualty of foreign policy brinkmanship”.
“The US is missing the point. The Phalaborwa rare earth was to benefit both countries and not just South Africa,” he said.
On the other hand, Rainbow Rare Earths stated that while South Africa has relatively transparent procurement and permitting processes, delays in licensing and inconsistent local consultation mechanisms can impact investor confidence.
But the aid freeze and broader U.S.–South Africa rift inject uncertainty. Future DFC lending or guarantees could slow, while the cuts risk raising South Africa’s country-risk profile in financial markets. This could make it harder, or more expensive, for Rainbow Rare Earths and TechMet to raise the additional ~US$317 million needed for full build-out of the Phalaborwa project.
