DAKAR - The US is backing the Ampasindava rare earths project in Madagascar as part of its strategy to loosen the dominance of rivals in critical minerals supply chains, the State Department has said, underscoring Washington's push to develop alternative sources of minerals now largely controlled by China.

The project highlights a shifting dynamic in Africa's critical minerals sector, where Chinese companies have long dominated investment in copper, cobalt and lithium. Some of the continent's leading rare earth developments are now emerging with US and broader Western support. 

London-listed Harena Rare Earths, owner and developer of the roughly $150-million Ampasindava project, said last week the US International Development Finance Corporation committed up to $4.48-million for pilot plant work, laboratory testing and environmental programmes, paving the way for potential future funding.

A State Department spokesperson said Washington's critical minerals strategy in Africa is aimed at increasing US investment in mining sectors that have been long dominated by "opaque, predatory investments from our adversaries".

"Madagascar fits within that strategy, and we see opportunities throughout the country to increase US and US-aligned investment in the critical mineral sector," the spokesperson said in an emailed response to Reuters questions.

China dominates global rare earth mining and processing and has used export controls in recent years to underscore its influence over supply chains that are critical for electric vehicles, wind turbines, electronics and defence systems.

PROCESSING OPTIONS IN US AND EUROPE 
The Ampasindava ionic clay deposit is rich in neodymium, praseodymium, dysprosium and terbium, vital elements for the manufacture of permanent magnets essential for defence applications including fighter jets and precision-guided missile systems, Harena says. 

The project is expected to produce about 4 000 metric tons of rare earth oxides annually, including 1 700 t of high-value magnet rare earths NdPr and DyTb, the company said.

Harena executive chairperson Andrew Murphy told Reuters on Monday that the company was seeking an exploitation permit and hopes to secure approval "in the next couple of weeks".

Madagascar's mines ministry did not immediately respond to requests for comment.

Harena aims to begin production at Ampasindava by mid-2028 and is evaluating processing options in the US and Europe, Murphy said, naming MP Materials, USA Rare Earths and Solvay among potential refining partners.

While the DFC commitment is relatively modest, Murphy said it could open the door to larger US backing as the roughly $150 million project advances toward construction.

A DFC official said the agency could consider additional support for the project, subject to due diligence and approvals, but declined to discuss potential financing.