The Trump administration has expanded its global rare earths strategy by backing a new mining project in Madagascar, part of an accelerated Washington effort to break China's dominance over critical minerals essential to advanced weaponry, AI infrastructure, oil refining, and electric vehicles.

The U.S. International Development Finance Corporation (DFC) — the federal government's development bank that finances private-sector projects in emerging markets — has committed up to $4.84 million to Harena Rare Earths' (OTCQB: CRMNF) Ampasindava project in northern Madagascar. The funding will support pilot plant operations, metallurgical testing, and environmental studies. Successful completion of these phases could unlock significantly larger U.S. government-backed construction financing. Harena estimates total project costs at approximately $150 million.

The Ampasindava ionic clay deposit is projected to produce 4,000 metric tons of rare earth oxides annually, including 1,700 tons of high-value magnet elements such as neodymium, praseodymium, dysprosium, and terbium. Ionic clay deposits are particularly attractive because they generally require less energy-intensive extraction and processing than hard-rock rare earth deposits, potentially lowering both costs and environmental impact — a meaningful advantage as Western nations race to build non-Chinese processing capacity.

A State Department spokesperson told Reuters that Washington aims to increase its critical minerals investments across Africa to counter "opaque, predatory investments from our adversaries" — a thinly veiled reference to China. "Madagascar fits within that strategy, and we see opportunities throughout the country to increase U.S. and U.S.-aligned investment in the critical mineral sector," the spokesperson said.

China currently controls nearly 70% of global rare earth mining and close to 90% of refined magnet processing. These elements are vital to numerous technologies, including crude oil refining, defense systems, EV batteries, wind turbines, healthcare equipment, and electronics.

The Madagascar initiative is not the first African rare earths project to receive Trump administration backing. In February, the U.S. Trade and Development Agency awarded a $1.87 million grant to Altona Rare Earths to fund a pre-feasibility study (PFS) for the Monte Muambe rare earths project in Mozambique.

Located in northwest Mozambique, the Monte Muambe deposit contains several critical and rare elements, including neodymium, praseodymium, dysprosium, and terbium. Initial parameters from earlier scoping models — now being refined under the current PFS — project approximately 15,000 tonnes of mixed rare earth carbonate produced annually over an 18-year mine life, with an estimated development cost of $276.3 million.

Altona Rare Earths has also discovered high-grade gallium intercepts within the mine's carbonatite deposit. Gallium is a critical input for semiconductors and advanced electronics, and China — which produces the vast majority of global supply — imposed export controls on the material in 2023, making non-Chinese sources increasingly strategic. The ongoing PFS includes metallurgical testing to evaluate recovering gallium as a valuable byproduct to enhance project economics. Additionally, exploration has confirmed co-existing fluorspar, which the company is assessing as a potentially viable standalone mineral asset.

The Trump administration has pursued numerous equity and project financing deals with rare earth companies as it works to secure a domestic REE supply chain. A year ago, the U.S. Department of Defense entered into a landmark public-private partnership with Nevada-based MP Materials (NYSE: MP), which included a $400 million purchase of convertible preferred stock by the DoD and a $150 million loan. The 10-year agreement also provided a price floor commitment, guaranteeing that 100% of magnets produced at MP Materials' upcoming 10X Facility in Texas will be purchased by defense and commercial customers, backed by a $110/kg NdPr price floor.

In January 2026, the administration reached a similar agreement with Oklahoma-based USA Rare Earth (NASDAQ: USAR), acquiring a 10% equity stake as part of a $1.6 billion financing package to build a domestic mine-to-magnet supply chain.

Over the past several years, China has repeatedly leveraged its rare earths dominance during trade disputes by imposing export controls and restricting processing technology transfers. Last year, Beijing imposed export licensing requirements on samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium in retaliation for U.S. tariffs. These heavy rare earths are indispensable to the high-performance permanent magnets used in electric vehicles, wind turbines, advanced electronics, and military systems.

China subsequently broadened those restrictions, expanding export controls to additional rare earth materials and tightening oversight of processing technologies, further consolidating its grip on the global supply chain.

Last month, Beijing escalated tensions by blacklisting 10 American companies — including top U.S. rare earth firms MP Materials and USA Rare Earth — from acquiring Chinese dual-use materials. The move came in retaliation after the U.S. Pentagon expanded its 1260H military-linked blacklist to include Chinese e-commerce giants Alibaba (NYSE: BABA) and Baidu (NASDAQ: BIDU), as well as major EV manufacturers BYD (OTCPK: BYDDF) and NIO (NYSE: NIO).

Madagascar represents the latest step in Washington's broader campaign to establish a strategic foothold across Africa's critical minerals sector. U.S. agencies have already backed projects in neighboring Mozambique and invested heavily in the Lobito Corridor — a transnational railway network under development to transport copper, cobalt, and other critical minerals from Angola, Zambia, and the Democratic Republic of the Congo to the Atlantic coast for export to Western markets — all aimed at reducing dependence on China.

By Alex Kimani for Oilprice.com