Rainbow Rare Earths, a London-listed mining company, is poised to receive financial backing from the US Government to develop a South African mine for extracting crucial metals vital for the energy transition.
The US International Development Finance Corporation plans to provide £40 million to Rainbow Rare Earths, which has a market capitalization of £63 million on the London Stock Exchange. The funding aims to support the construction of a plant at the site located in South Africa’s Kruger National Park.
This move reflects the US government’s strategic interest in countering China’s dominance in the rare earths sector. China currently controls 70 percent of rare earths mining and 90 percent of refined output, raising concerns about global supply and pricing manipulation.
Rainbow Rare Earths owns 85 percent of the South African site situated in the Phalaborwa region. The site stands out due to its low levels of radioactive material and a specialized extraction and processing system that yields higher rare earth amounts than typical.
George Bennett, CEO of Rainbow Rare Earths, emphasized the significance of projects like this in diversifying rare earth element sources and reducing dependence on China. These elements are essential components in various technologies, including green energy systems, electric vehicles and electronic devices.
Despite current challenges in the metals sector, with rare earth prices falling by around 63 percent since 2022, the demand for critical minerals is projected to increase significantly in the coming decade. The UK, however, lags behind the EU and the US in securing its rare earth supply, relying entirely on imports without a established supply framework.
While the UK government has committed £15 million to further access rare earths projects, efforts to bolster domestic supply and compete with China’s dominance remain a priority for Western nations.