The US International Development Finance Corporation has committed up to $4.84 million to a rare earths project in Madagascar, a small but pointed bet in Washington’s broader campaign to loosen China’s chokehold on the minerals that power everything from fighter jets to electric vehicles.

The funding targets the Ampasindava ionic clay rare earths project, operated by London-listed Harena Rare Earths Plc, which holds a 75% stake. The total project investment sits around $150 million, meaning the DFC’s contribution is more of a down payment on a relationship than a full bankroll.

Why rare earths matter more than ever

China currently dominates over 70% of global rare earth production. The materials in question, things like Neodymium, Praseodymium, Dysprosium, and Terbium, are essential ingredients in permanent magnets used in EV motors, wind turbines, consumer electronics, and defense systems.

The Ampasindava project is targeting annual output of approximately 4,000 metric tons of rare earth oxides by mid-2028. Of that, roughly 1,700 metric tons per year would be high-value magnet materials, specifically NdPr (Neodymium-Praseodymium) and DyTb (Dysprosium-Terbium).

Harena Rare Earths is currently working through the necessary permitting process, conducting environmental and social impact studies, and building out a proof-of-concept pilot plant. Commercial production is expected within the next few years, with that mid-2028 target serving as the benchmark.

The bigger chess game

The US State Department confirmed its support for the project as part of a wider strategic initiative to diversify rare earth sourcing away from China.

This marks the DFC’s first commitment to Harena Rare Earths, signaling that Madagascar’s ionic clay deposits have caught the attention of US policymakers scouting for new sources.

Harena’s stock, trading under HREE.L in London, surged on the funding news. A $4.84 million government commitment attached to a $150 million project isn’t transformational capital by itself, but it functions as a credibility signal that the US government considers this project strategically important enough to put money behind it.

What this means for investors

Australia’s Lynas Rare Earths has been the most prominent non-Chinese producer for years, and the US has invested in domestic projects like MP Materials’ Mountain Pass mine in California. But those operations alone can’t offset China’s scale. Projects like Ampasindava represent the next wave of diversification, smaller operations scattered across multiple jurisdictions that collectively reduce concentration risk.

A $150 million project in Madagascar carries execution risk that a mine in Nevada doesn’t. Political stability, permitting timelines, infrastructure gaps, and the challenge of scaling from pilot plant to commercial production are all real hurdles. The mid-2028 production target is ambitious for a project still in the permitting and study phase.