Industrial waste could unlock a rare earths supply chain

From the newsletter

A $50 million US-backed investment in South Africa’s Phalaborwa project, built on historic phosphate waste, aims to convert mining residues into rare earth elements, opening a new frontier for the continent’s circular economy. If commercially proven, the model could enable recovery of critical minerals from industrial waste streams across Africa.

• Phalaborwa sits on 35 million tonnes of phosphogypsum from historic phosphate mining. Extraction is expected to yield neodymium, praseodymium, dysprosium and terbium – all of them are magnet rare earth elements critical to energy, transport and defence sectors. 

• Demand for rare earths is rising, alongside efforts to diversify supply chains beyond China, positioning Africa as a potential alternative source as buyers seek to secure access.

More details

• Targeting first production in 2028, the Phalaborwa Rare Earths Project  is being developed by London-listed Rainbow Rare Earths and backed by the U.S. International Development Finance Corporation through its stake in TechMet. An interim economic study published in December 2024 points to margins of around 70%, driven largely by low-cost feedstock. Unlike conventional mining, phosphogypsum is already mined and chemically processed, reducing both extraction costs and energy intensity.

• The project reflects a broader shift in how critical minerals could be sourced, with secondary recovery from industrial waste emerging as a viable alternative to primary extraction. Across Africa, decades of mining and fertiliser production have left behind large volumes of tailings and by-products, many of which remain underutilised. North Africa’s phosphate producers, particularly Morocco and Egypt, hold large phosphogypsum stockpiles linked to established fertiliser industries and export infrastructure. In Southern Africa, historic mining regions across the Copperbelt and South Africa offer scale through extensive tailings, though these often require more complex processing. Meanwhile, mineral sands producers in countries such as Sierra Leone and Madagascar generate residues containing monazite, a rare earth-bearing mineral, though these remain largely unprocessed.

• This potential is gaining attention as global demand continues to rise. Demand for magnet rare earth elements has doubled since 2015 and is projected to grow by a further third by 2030, driven by electrification and the rapid deployment of energy technologies such as electric vehicles and wind turbines. Growth in automation, robotics and digital systems is also expected to play an increasing role in sustaining demand beyond 2030.

• At the same time, supply remains highly concentrated, with China accounting for around 70% of global mining and up to 90% of refining capacity. This imbalance is increasingly geopolitical. In 2025, China introduced export controls on several rare earth elements and related technologies, triggering supply disruptions that forced some automakers in the United States and Europe to cut production. Although exports later resumed, the episode exposed the fragility of global supply chains and led to sustained price premiums for non-Chinese sources. Expanded licensing requirements have since tightened control across the value chain. If fully enforced, such restrictions could put up to $6.5 trillion in downstream economic activity at risk globally, underscoring the urgency of diversifying supply. 

• From a circular economy perspective, the model also addresses long-standing environmental liabilities. Phosphogypsum stacks are often associated with contamination risks and high rehabilitation costs. Recovering value from these materials offers a dual benefit, reducing environmental exposure while creating new revenue streams. Despite this potential, recycling rates for rare earth elements remain low globally, highlighting the untapped opportunity for secondary recovery.

• However, the key constraint lies not in resource availability but in processing. Rare earth extraction is only the first step in a complex value chain dominated by separation and refining, where China maintains a near-monopoly. Without investment in these downstream capabilities, most African projects are likely to export intermediate products, limiting value capture. While early studies suggest strong margins, these remain sensitive to recovery rates and processing costs, particularly as projects scale from pilot to commercial production. As a result, bankability will depend less on resource size and more on securing long-term offtake agreements and integrating into global supply chains to ensure demand visibility. 

Our take

• If successful, Phalaborwa could become a template for similar projects across Africa. But without a coordinated push into processing and manufacturing, these models risk reinforcing the same pattern of exporting intermediate materials while higher-value segments remain elsewhere.

• With supply chain diversification now a strategic priority, the window for new entrants is narrowing. The question is whether Africa can move quickly enough to convert current interest into lasting market positions before supply chains stabilise.