Mining Is Not a Supply Chain

On July 22, 2026, the Australian mining company Harena announced it had signed a Project Development Funding Agreement with the U.S. International Development Finance Corporation (DFC) for up to $4.84 million. The money will fund permitting, environmental and social studies, laboratory work, and pilot-plant development at Ampasindava, a rare-earth deposit on the northwest coast of Madagascar. On paper, American capital backing a non-Chinese source of the minerals needed for everything from fighter jets to wind turbines is a great success, but zooming on the deal exposes critical oversights in Washington’s strategy.

China's dominance of rare earths is usually described as a mining problem when it’s actually a refining one. Although China controls roughly 60% of global rare-earth mining, it controls more than 91% of global refining and nearly 94% of permanent-magnet production.

Ampasindava contains high concentrations of neodymium, praseodymium, dysprosium, and terbium, the elements needed to build the permanent magnets used in precision-guided munitions and fighter jets. Once complete, the mine is expected to produce about 4,000 metric tons of rare-earth oxides a year, including roughly 1,700 tons of the higher-value magnet rare earths neodymium-praseodymium and dysprosium and terbium.

Harena is targeting production in mid-2028 and is currently shopping the offtake around Europe and the United States. The project, as designed, covers mining only. There are no provisions yet for on-site separation, refining, or magnet-making. Madagascar's ore would strengthen the upstream end of the Western supply chain but at the same time leave the specialized, high-value downstream steps untouched.

This is the pattern to watch elsewhere in Africa as well. Outside Ampasindava, U.S. investment in African rare earths has gone mainly to Malawi and South Africa, with mineral-processing frameworks secured in Kenya and Tanzania. The current approach is to fund extraction in countries not aligned with Beijing.

Even if Washington wanted to build the missing downstream capacity tomorrow, it would run into a second constraint: people. American firms have the capability to start building a Western rare-earth supply chain, but they face a shrinking mining pipeline, almost no domestic separation expertise, and no existing magnet-manufacturing workforce. Capital can be raised faster than metallurgists and process engineers can be trained.

This is also where Africa's leverage comes in. African leaders are increasingly pushing foreign companies to conduct some processing locally, both for economic development and because purely extractive arrangements carry obvious post-colonial baggage. Zimbabwe, Tanzania, and Ghana have already banned raw lithium exports rather than continue shipping unprocessed ore abroad. As the scramble for critical minerals accelerates, African governments will realize they hold real policy leverage, and DFC investment offers should get ahead of that by proactively including local processing or capacity-building components.

France has already moved in this direction, committing to shift some mining-related processing back to Gabon by 2029. If Washington wants African partners on favorable terms over the long run, some renegotiation of how gains are split will be necessary. There is also a workforce opportunity buried in this trade-off. Training African miners and engineers, whether they eventually work in U.S. facilities or return home to build local manufacturing, either rebuilds the domestic rare earth elements (REE) workforce or seeds economic and soft-power gains that cut against Chinese influence. China already runs education and upskilling programs with its African partners; a comparable American offer would not be a novel idea, just a belated one.

Getting the material out is a whole other issue that gets less attention than mining or processing. Through the Belt and Road Initiative, China controls much of the logistics infrastructure connecting mines to ports across Africa. Even if mining, processing, and magnet production all eventually happened in American or partner-nation facilities, the supply chain could still run through Chinese-controlled roads, rail, and ports. Extraction and processing are the visible chokepoints. Logistics is the one that can quietly undo progress on the other two.

China has long dominated investment in Africa's copper, cobalt, and lithium sectors and is well positioned to extend that position into rare earths. It already controls the downstream end of the REE supply chain; adding ownership stakes in African REE projects would let it close the loop from mine to finished component. In the first half of 2025 alone, Chinese state-owned banks issued $24.9 billion in Belt and Road-linked mining loans, and mining's share of BRI engagement has been trending upward. If the United States treats African engagement as optional, it is ceding the field to competitors who clearly do not.

Nonetheless, Washington isn't starting from zero on coordination either. Since 2022, the U.S. has belonged to the Minerals Security Partnership, a group of countries including the EU, Japan, Australia, and Canada that pools resources and coordinates on which mining and processing projects to back. In 2025 the G7 went further, launching a Critical Minerals Action Plan that called on member countries' development banks, including the US government’s DFC, to coordinate their support instead of funding projects one at a time in isolation. The infrastructure to act as a bloc already exists. It just hasn't been used at anywhere near the scale China's numbers demand.

The stakes of inaction, however, have significant implications. Estimates show that a full Chinese export restriction on rare-earth metals could cost $6.5 trillion outside China, on top of severing the supply chains behind precision-guided missiles and other advanced defense platforms the United States has relied on for decades. Despite growing awareness of the problem, current investment is not close to sufficient: by 2035, existing and announced rare-earth projects are projected to supply less than half of global mining demand outside China, a quarter of refining demand, and less than a fifth of magnet-production demand. Closing that gap is estimated to require roughly $60 billion in investment over the next decade.

In 2010, China restricted its rare-earth exports, and prices spiked. Western companies rushed to take advantage, including reopening Mountain Pass, an old mine in California. Then China lifted the restrictions, prices collapsed back down, and by 2015 the company that reopened Mountain Pass, Molycorp, was bankrupt. Its stock had gone from $79 a share to 35 cents. China didn't have to invade anyone or break any laws. It just let the market do the work, because it could set the price low enough to make new competitors unprofitable.

The Pentagon's answer to this, so far, has been a deal with MP Materials, the company that now owns Mountain Pass. In 2025, the Department of Defense agreed to guarantee that MP Materials would get paid at least $110 for every kilogram of a key rare-earth material it sells, no matter what China does to the market price. If the market price falls below that, the government covers the difference. The government also promised to buy all the magnets from MP's new factory for ten years. In plain terms: Washington removed the incentive for China to simply crash the price and wait for the American company to go under again.

DFC financing should be tied to an integrated supply-chain strategy rather than treated as an end in itself. Mine finance should be paired with guaranteed non-Chinese processing and logistics, as well as direct investment in Western separation and magnet manufacturing. Long-term offtake agreements and price protections can give producers the certainty needed to survive market manipulation. African partners, meanwhile, should receive meaningful local processing and economic benefits rather than serving solely as sources of raw material.

Without these elements, individual mining investments remain commercially exposed, single-purpose bets rather than components of a secure supply chain. A mine with no refining outlet and no magnet buyer is still, functionally, a supplier to China.

Congress has already given DFC room to act. Its December 2025 reauthorization raised its lending and investment ceiling from $60 billion to $205 billion and created a critical-minerals exception allowing investment in Five Eyes countries. That matters because much of the missing separation, refining, and magnet capacity needs to be built in allied countries with advanced economies. With the money and authorization to fund a new supply chain, DFC now faces a choice rather than a legal obstacle.

In what amounts to a second great-power competition, the winners will not be the countries that own the most mines. They will be the ones that pair extraction with effective governance, resilient infrastructure, and integrated processing capacity. China's 91% share of global refined rare-earth output and 94% share of magnet production make clear that mining investment alone will not deliver the supply-chain resilience the United States is after.

The United States should measure critical-mineral security by how much of the resulting supply chain can operate independently of China, not by how many foreign mines it has financed. Africa can be a genuine pillar of American rare-earth diversification, but only if Washington connects extraction to processing, purchasing, price protection, manufacturing, and local value creation. Absent that, the United States risks changing where rare earths come out of the ground without changing who controls them before they reach American industry.

Viktor Kiss is an independent researcher specializing in hybrid threats, Sahelian Africa, and Russia. Mr. Kiss holds a Master of Arts in International Affairs from the Johns Hopkins University School of Advanced International Studies (SAIS) and the Diplomatic Academy of Vienna.

Michael Roberts is Yorktown Institute’s senior research assistant.