South Africa has committed US$20 million in state funding to a domestic rare earths development project as the European Union intensifies efforts to reduce its dependence on China for critical minerals used in clean energy and advanced technologies.
The country’s development finance institution, the Industrial Development Corporation (IDC), has approved the investment into Frontier Rare Earths Ltd.’s Zandkopsdrift project in the Northern Cape. The Luxembourg-registered company confirmed the funding this week, describing the project as a strategic asset for Europe’s critical minerals supply chain.
The European Union designated Zandkopsdrift as a strategic project in 2025 as part of its broader push to secure alternative sources of rare earth elements, which are essential for electric vehicle motors, wind turbines, smartphones, defence systems and other high-tech applications. China currently dominates the global processing and refining of rare earths, giving it significant leverage over supply chains.
The IDC’s equity investment will be used to fund a definitive feasibility study for the Zandkopsdrift project. Frontier Rare Earths expects the mine to begin producing rare earth products and battery-grade manganese around 2030. The company did not disclose the size of the IDC’s shareholding.
Zandkopsdrift is one of the most advanced rare earths projects on the African continent. Frontier said it is evaluating several potential European funding channels to support the development and has signed an agreement with French firm Carester SAS. Under the agreement, Carester will deploy proprietary extraction technology at the mine and process part of the output at a rare earth separation plant currently under construction in France.
The investment comes as the EU, the United States and other advanced economies race to diversify supply away from China, which controls the bulk of global rare earth refining capacity. Analysts say Africa could become a significant new source of supply over the next decade. Previous estimates suggest African mines could account for nearly 10% of global rare earth output within five years, up from virtually zero today.
For South Africa, the project aligns with efforts to move up the minerals value chain, attract foreign investment and position the country as a strategic supplier of critical inputs for the global energy transition. The IDC already holds stakes across the mining and metals sector, including investments in Kumba Iron Ore, ArcelorMittal South Africa and Merafe Resources.
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