Vietnam’s Bid to Challenge China’s Rare Earths Dominance


Vietnam is gearing up to revive its largest rare-earths mine in the coming year through a Western-backed initiative, potentially competing with the world’s leading producers. This move is part of Vietnam’s broader strategy to reduce China’s stranglehold on the sector critical for advanced technologies like electric vehicles, smartphones, and wind turbines.

As an initial step, Vietnam’s government plans to initiate tenders for multiple blocks of its Dong Pao mine before the end of this year, as revealed by Tessa Kutscher, an executive at Australia’s Blackstone Minerals Ltd. Blackstone Minerals intends to bid for at least one concession in this auction. The exact timing of the auction may be subject to change, but the government’s objective is to restart the mine next year, according to Luu Anh Tuan, chairman of Vietnam Rare Earth JSC (VTRE), the country’s primary refiner, and Blackstone’s partner in this endeavor.

This proposed revival of the Dong Pao mine, which hasn’t been operational for at least seven years, is seen as a strategic move in light of concerns over China’s dominance in rare-earth minerals and its ongoing disputes with the United States and its allies. Vietnam possesses the world’s second-largest rare-earth deposits, but these resources have largely remained untapped due to China’s influence on global prices.

In an effort to diversify supply chains and reduce reliance on China, the U.S. President Joe Biden signed an agreement during his visit to Vietnam to boost investment in the country’s rare-earth reserves.

Blackstone Minerals plans to invest approximately $100 million in the project if they secure a winning bid. They are also in discussions with potential clients, including electric vehicle manufacturers like VinFast and Rivian, to establish contracts with fixed prices, ensuring a stable supply chain for buyers.

However, some challenges remain, as it’s uncertain whether clients would be willing to pay a premium for rare-earth resources from Vietnam, given the opaque nature of the market. Notably, Japanese investors Toyota Tsusho and Sojitz abandoned projects in Dong Pao in recent years due to increased Chinese supply and price fluctuations.

Despite the hurdles, Vietnam’s ambitious goal is to become a significant player in the rare-earth industry, potentially producing up to 60,000 tons of rare-earth oxide (REO) equivalent annually by 2030, which would account for 5% to 15% of China’s projected output.

The U.S. has shown interest in supporting Vietnam’s rare-earth initiatives, aiming to help the country map its rare-earth resources and attract high-quality investments. While concrete plans involving U.S. investors are yet to be confirmed, this development could encourage American investors to participate in Vietnam’s rare-earth projects.

Ultimately, Vietnam envisions a role encompassing the entire rare-earth supply chain, from ore extraction to the production of final products. However, this endeavor is complex, as China currently controls many processing technologies and the metallization process necessary for rare-earth metals. VTRE is collaborating with South Korea’s Setopia on a pilot project to establish a metallization factory, a significant step toward achieving this goal.

Despite the challenges ahead, Vietnam’s rich rare-earth resources and growing efforts in the sector position it as a potential alternative to China in the global rare-earth market.