A South African project that plans to extract rare earths from fertiliser waste could become a new source of materials for European magnet manufacturers under an agreement announced on Thursday.
- Canada’s Neo has signed a rare earth supply agreement with South Africa’s Rainbow Rare Earths.
- The Phalaborwa project aims to recover rare earths from 35 million tonnes of fertiliser waste.
- The partnership could help Europe reduce its dependence on China for magnet materials.
- First production is expected in 2028, subject to project development.
Canada’s Neo Performance Materials has signed a memorandum of understanding with Rainbow Rare Earths covering technical support and the proposed purchase of output from Rainbow’s Phalaborwa project.
Neo would receive rights to 40% of its planned neodymium-praseodymium oxide production and 65% of its planned mixed heavy rare earth carbonate production, which includes dysprosium and terbium.
The percentages apply to different products, not to ownership of the project. The companies have yet to conclude binding supply agreements.
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Those four elements matter because they are used to make powerful permanent magnets. The magnets have applications in electric vehicles and industrial equipment, as well as aerospace and defence technology. The agreement does not identify a defence customer or announce a military supply contract.
A South African source for Europe
Phalaborwa’s proposed feedstock sits above ground in two stockpiles left by historical phosphate processing. Rainbow estimates that they contain 35 million tonnes of material from which it hopes to recover rare earths.
It plans to process the material in South Africa, while Neo would provide expertise for the final separation stage. Testing is under way in Estonia, where Neo has rare earth separation and magnet manufacturing facilities; a further pilot campaign is planned in Johannesburg.
“This partnership with Rainbow advances Neo’s strategy to build a secure and resilient rare earth magnetics supply chain,” Neo chief executive Rahim Suleman said in the company’s 24 September announcement.
Rainbow chief executive George Bennett said choosing a technical partner was the remaining step needed to define its proposed extraction process.
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The wider commercial opportunity lies in reducing dependence on a highly concentrated supply chain.
According to the International Energy Agency, China accounted for 91% of global refined magnet rare earth output and 94% of sintered permanent magnet production in 2024. Its export controls have sharpened interest in sources of supply outside China.
A viable South African project, linked to established European processing capacity, would address part of that challenge if it reaches production.
The agreement marks progress, but it is not a shipment or a completed investment decision. Rainbow expects to publish a pre-feasibility study in the final quarter of 2026 and complete a definitive feasibility study in the first half of 2027.
Its current project page puts expected first production in 2028, subject to the development process. It also describes a proposed $50 million US development-finance investment through TechMet, that sum should not be described as money newly awarded under the Neo agreement.
