US beats China to clinch Sh9.7tr minerals deal

America has struck a preliminary minerals deal with Kenya, securing a foothold in one of the world’s largest untapped rare earth deposits worth about $62.4 billion (Sh9.7 trillion). The deal edges out China in a critical race for resources vital to modern technology and national defence. 

The until-now secret agreement, announced by President William Ruto on the sidelines of the G7 summit in France, would require strategic minerals, including niobium and rare earths, to be processed domestically, marking a fundamental departure from Africa’s historical role as a supplier of raw materials.  

However, the pact’s secretive terms could revive the kind of public unease that the contentious US-Kenya Ebola agreement raised weeks ago. 

“We have agreed the minerals will be processed in Kenya,” Ruto told Reuters in an interview, following discussions with G7 leaders, including US President Donald Trump. “We’ve agreed on what is mutually beneficial between Kenya and the US, and President Trump and the American administration are happy with it”. 

For Washington, the deal secures a strategic prize, analysts said. 

Mrima Hill in Kwale County is a forested site estimated to hold millions of tonnes of niobium and tens of millions of tonnes of rare earth materials.

Niobium strengthens steel for jet engines, oil pipelines, and space equipment, assets the US military considers “non-negotiable”.

Rare earths like yttrium, lanthanum, and neodymium are essential for electric vehicle batteries, missile guidance systems, and AI hardware. 

The Sh9.7 trillion estimated to lie beneath Mrima Hill is roughly half of Kenya’s entire economic output. It is also enough to pay off nearly 90 per cent of Kenya’s entire public debt, currently standing at Sh12.8 trillion.

The deal reflects a wider push by Africa to move away from models of exporting raw materials, as competition intensifies between Western nations and China over access to resources needed for the energy transition and advanced technologies.

“The natural resources can no longer be exported and processed elsewhere. They have to be processed in-country and in-continent. We have to create value out of them,” he said.

The G7 leaders agreed on Wednesday to step up coordination to cut their countries’ reliance on China for critical minerals, including plans to align stockpiling and launch a new platform with an expanded role for the International Energy Agency.

China currently controls nearly 70 per cent of the world’s processing capacity for critical minerals.

Ruto said he agreed with Trump that partnerships should be based on investment rather than aid, adding that the continent no longer wanted relationships built on dependency or resource extraction.

The deal is already stirring unease. Ruto provided no additional details on the framework’s terms, and Kenyan officials were tight-lipped yesterday about what Kenya secured in return for access by Washington to the Coast’s buried wealth.

In January, Kenya hosted the US-Kenya Critical Supply Chains Conference in Nairobi, where US Deputy Secretary of State Christopher Landau met Ruto to discuss “reliable” supply chains. “Successful international partnerships are built on transparency, mutual benefit and fairness,” Landau said during the conference.

American officials had earlier privately expressed frustration with Kenya’s Mining Act, which imposes multiple layers of local participation that Washington finds particularly troubling. For large-scale operations, the State automatically receives a 10 per cent free stake. Beyond that, the law requires an additional 35 per cent local ownership of the mining licence holder. The government also demands at least 20 per cent of the licence holder’s shares be listed on the Nairobi Securities Exchange within first three years of production.

If Washington succeeds in pressing Kenya to relax the local-equity rules, the impact could be far-reaching. Foreign and American mining companies would gain greater control over operations, pricing and technology.

Kenyan officials insist local participation rules are non-negotiable. But US officials argue that without greater flexibility, American capital will stay away, leaving the “chokehold” on the strategic minerals firmly in the hands of US rivals like China. 

Beyond the geopolitical chess match, the project faces a profound local obstacle. Mrima Hill is a “double-gazetted” site: both a protected national forest reserve and a sacred Kaya forest for the Mijikenda and Digo communities. Already, residents have raised alarms over the potential destruction of sacred shrines and the risk of radioactive waste, a common byproduct of rare earth mining.

The Mijikenda elders have vowed to protect the spiritual integrity of the hill, even as the Ministry of Mining opens the multi-billion-dollar tender to global bidders.

In March, the Kenyan government officially launched a competitive tender for Mrima Hill, inviting global companies to bid for the right to mine the deposit. An Australian consortium of RareX and Iluka Resources has also announced a joint bid.

A US-backed consortium, Mrima Earth Ltd, recently submitted a “value-added” bid promising to process the minerals inside Kenya, led by experts who previously managed the Mountain Pass rare earth project in California.

Ruto said Kenya and other African nations would not choose between Washington and Beijing, but instead pursue multiple partnerships aligned with their own economic priorities.

“There are opportunities for everybody,” he said, adding that Africa had recently concluded trade deals with China and hoped that there would now be deeper engagement with the US and Europe.