Washington’s decision to provide financial support for the Ampasindava rare earth elements project developed by London listed Harena Rare Earths has opened up a new front in the competition for critical minerals in Africa.[i] The US International Development Finance Corporation is expected to allocate up to 4.84 million dollar for the approximately 150 million dollar project located in northwestern Madagascar. These funds will be used for pilot plant operations, laboratory testing, permitting processes, and environmental programs. Production is scheduled to begin in mid-2028.
Although this amount may seem limited at first glance, its strategic value extends beyond the figure itself. By getting involved in the project before an operating license has been obtained and a final investment decision has been made, Washington is securing an early position regarding future financing, processing, and sales arrangements. Thus, Ampasindava takes on a broader significance than just a mining investment and becomes the African component of the US’s efforts to diversify away from China-centered supply chains.
Rare earth elements are among the key inputs in a broad production chain that ranges from electric vehicle motors to wind turbines, and from unmanned systems to precision-guided munitions. China accounts for approximately 60 percent of global mining production, 91 percent of refining, and 94 percent of permanent magnet production for rare earth elements used in magnet manufacturing.[ii] The export restrictions introduced in 2025 forced some manufacturers to reduce capacity and brought economic security concerns to the forefront.
What makes Ampasindava valuable is not only the size of the deposit but also its composition. The site, which consists of an ionic clay formation, contains neodymium, praseodymium, dysprosium, and terbium. These elements play a critical role in the production of high-performance magnets. The project’s defined resource contains approximately 606,000 metric tons of total rare earth oxides within 699 million metric tons of ore. Annual production is expected to reach 4,000 metric tons, of which approximately 1,700 metric tons will consist of high-value magnet elements.[iii]
A project of this scale does not offer the United States the capacity to match China’s production levels in the short term. However, establishing a new supply source that is considered reliable and politically compatible could increase options for mitigating supply disruptions. The initial grant of 4.84 million dollar represents approximately 3 percent of the total investment.[iv] Washington is thus acquiring a strategic option that could influence the project’s direction at a relatively low cost. The early involvement of public funds also ensures that the permitting and feasibility risks which private investors are unwilling to assume are shared.
Linking the project to facilities in the US and Europe makes this calculation even clearer. The mining company is evaluating potential partnerships with American and European organizations such as MP Materials, USA Rare Earths, and Solvay for processing activities. The link to be established between the site where the ore is mined and the centers where it is processed and converted into magnets will determine Ampasindava’s true geopolitical value. If the raw material from Madagascar is processed in China, the source will be diversified, but dependence at the most critical stage of the supply chain will persist.
China’s dominance rests not so much on its vast reserves as on the integrated industrial capacity it has built over decades. Separation technology, a skilled workforce, chemical processing infrastructure, and large-scale magnet production provide Beijing with a cost advantage. The fact that existing and planned facilities outside China will be able to meet only about one-quarter of the expected refining demand by 2035 indicates that new mines alone will not be sufficient. Competition will occur at every stage, from ore to the final product. The ability of China-based supply to drive down prices could make it difficult for new projects to remain profitable, leading Western ventures to rely on long-term purchase guarantees and public support.
This development could also alter Africa’s role in the politics of critical minerals. For many years, the continent has been viewed as a source of raw materials for global industry through its exports of copper, cobalt, lithium, and uranium. Intensifying competition for rare earths is giving producing countries the opportunity to renegotiate investment terms. If Madagascar can link this interest to local processing capacity, technical training, infrastructure investment, and higher public revenues, it can transform its resource wealth into an industrial policy. Seeking price stability and local supply obligations in long-term purchase agreements could significantly increase the country’s bargaining power.
Such a transformation will not happen on its own. If external financing is confined to the mining site and export routes, the resulting structure could perpetuate traditional raw material dependence with a new group of minerals. The Antananarivo government must establish binding conditions regarding operating licenses, tax regulations, local employment, and technology transfer. The balance struck between the US’s supply security and Madagascar’s development aspirations will determine the project’s lasting impact on the country.
The environmental dimension of Ampasindava can also be considered alongside geopolitical factors. The chemical leaching methods used in Ionian clay deposits can pose serious risks in terms of water resources, soil structure, and radioactive residues. The region’s biodiversity and the local livelihood system, which relies on the production of vanilla, cocoa, coffee, and black pepper, require careful monitoring. Field studies on large-scale mining investments in Madagascar show that economic expectations frequently clash with social and ecological costs at the local level.[v]
For this reason, environmental and social studies should not remain merely technical documents submitted to complete the financing process. Local community participation in decision-making processes, the public disclosure of water and soil data, independent oversight, and effective redress mechanisms can strengthen the project’s legitimacy. The credibility of Washington’s criticism of China’s investments regarding transparency will be measured by the standards it applies to the projects it supports.
For Madagascar, a rapprochement with the US does not mean severing economic ties with Beijing. Antananarivo can turn the competition between the two major powers into a bargaining arena that enhances the quality of investment. While Chinese financing offers infrastructure expertise and market access, US support can provide alternative capital, political visibility, and access to Western business networks. Growing demand from Japan, South Korea, and European countries could also create a third area for negotiation. A multifaceted policy can prevent the country from becoming overly dependent on any single external actor.
Ampasindava’s location, which opens onto the Indian Ocean, also elevates the project beyond that of an intra-African mining venture. Access to European, Gulf, and Asian markets can be achieved via ports in Eastern and Southern Africa. The island nation’s location between the Mozambique Channel and the southwestern Indian Ocean makes it essential to evaluate mining logistics in conjunction with port investments and maritime security. This geography brings critical minerals and maritime security closer together. The US presence in Madagascar could align with the goals of protecting supply lines in the Indian Ocean and developing alternative routes to China’s commercial network.
Nevertheless, it would be incorrect to measure the project’s success solely by the size of the initial funding provided. An operating license must be obtained, the final feasibility study must be completed, approximately 150 million dollar in capital must be secured, and refining capacity outside of China must be made operational. If any of these stages is delayed, the 2028 production target may be pushed back. Volatility in rare earth prices and separation costs may also influence the investment decision. Early financing sends a strong political signal. However, a sustainable supply chain requires long-term capital, technical expertise, and local trust.
In conclusion, the US move in Madagascar does not appear to be on a scale that could quickly eliminate China’s dominance in rare earths. Nevertheless, Ampasindava is a striking example of Washington’s new approach, in which it enters the African mining sector earlier and seeks to establish processing partnerships before production begins. If the project is supported by local value-added activities, environmental safeguards, and a refining network outside of China, even a modest initial investment could trigger a broader transformation of the supply chain. If the ore is shipped off the continent in its raw form, the supply geography will shift, and the economic structure of dependency will largely remain intact.
[i] “US backs Madagascar rare earths project in push to loosen China’s supply chain grip”, Reuters, https://www.reuters.com/world/africa/us-backs-madagascar-rare-earths-project-push-loosen-chinas-supply-chain-grip-2026-07-28/, (Date of Access: 29.07.2026).
[ii] International Energy Agency, Rare Earth Elements, https://www.iea.org/reports/rare-earth-elements, (Date of Access: 29.07.2026).
[iii] “Ampasindava Rare Earths Project”, Harena Rare Earths PLC, https://harenaresources.com/ampasindava-ree-project, (Date of Access: 29.07.2026).
[iv] “Signing of Project Development Funding Agreement with DFC”, Harena Rare Earths PLC, https://www.otcmarkets.com/news-otcapi/news/document/content/id?id=91936, (Date of Access: 29.07.2026).
[v] Julie G. Zaehringer vd., “How are large-scale extractive industries affecting progress toward the sustainable development goals in Madagascar? Perceived social-ecological impacts of mining investments”, Current Research in Environmental Sustainability, Cilt 8, 2024, Makale 100257, https://doi.org/10.1016/j.crsust.2024.100257 (Date of Access: 29.07.2026).
