Two significant developments for Malawi’s emerging rare earth sector converged in September 2025. The Songwe Hill rare earth deposit — operated by Mkango Resources and its processing partner HyProMag — received a $4.6 million loan from the US Development Finance Corporation (DFC) for engineering and feasibility work, and was awarded Strategic Project status under the EU Critical Raw Materials Act (CRMA).

Together, these designations represent a meaningful shift in how Western governments and institutions view Malawi’s mineral sector — from peripheral to strategically relevant.

What Songwe Hill is

Songwe Hill is a rare earth element (REE) deposit in southern Malawi. It contains significant concentrations of neodymium and praseodymium (NdPr) — the magnet materials used in electric vehicle motors, wind turbines, and defence applications. The project is operated by Mkango Resources, a TSX-listed company, with the processing and magnet recycling side being developed by HyProMag, Mkango’s UK-based joint venture partner.

The project has been in the exploration and feasibility phase for over a decade. What is changing now is the external financing environment: Western governments are willing to deploy concessional capital to develop non-Chinese rare earth supply chains.

The DFC loan

The US International Development Finance Corporation provided a $4.6 million loan to support front-end engineering and design (FEED) work and feasibility study completion for the Songwe Hill project. DFC financing for a mining project is significant because it:

  • Provides capital at concessional rates that would not be available from commercial lenders at the current project stage
  • Signals US government alignment with the project as part of its critical minerals strategy
  • Creates a relationship that may pave the way for larger financing at the construction stage

The DFC has been increasingly active in African critical minerals, competing with Chinese state financing for influence in the minerals sector. Malawi is a beneficiary of this competition.

EU Critical Raw Materials Act Strategic Project designation

Under the EU CRMA, projects that receive Strategic Project status benefit from:

  • Streamlined permitting in EU member states for the downstream processing and manufacturing stage
  • Access to EU financing instruments including the European Investment Bank and the European Bank for Reconstruction and Development
  • Priority access to EU off-take agreements and supply chain partnerships
  • Fast-track due diligence from European buyers and industrial partners

For the Songwe Hill project specifically, the designation matters most for the HyProMag side — the magnet alloy processing that will happen in the UK and Europe using Malawi-sourced rare earth concentrate. But it also raises the profile of the Malawi mining operation itself.

What this means for Malawi’s mining sector

The Songwe Hill developments are a case study in how Western strategic competition for critical minerals is creating opportunities for African mineral exporters. Malawi has several assets in this category:

  • Songwe Hill (rare earths) — now receiving Western government financing
  • Kasiya (graphite and rutile, Sovereign Metals) — largest natural flake graphite deposit in the world, also attracting strategic investor interest
  • Kangankunde (rare earths, Mkango) — earlier stage but a significant deposit

The common thread is that materials used in the energy transition and in defence are attracting concessional financing and strategic partnerships from Western governments. This changes the risk/return calculus for mining investment in Malawi.

For international companies

Companies evaluating Malawi’s minerals sector should note that the DFC and EU CRMA designations are quality signals — they represent due diligence by sophisticated government institutions that concluded the projects are viable and strategically important.

For upstream suppliers, equipment providers, and logistics companies that serve the mining sector, the Songwe Hill and Kasiya projects represent concrete near-term demand that will require procurement from international and regional suppliers.

Sources: Mkango Resources investor relations, EU CRMA project list, DFC press releases, Mining Technology.