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Vietnam’s Rare Earth Industry is on the Rise
15 Dec 2023
What is Happening?
Vietnam currently reserves approximately 20 million tons of rare earth, mainly located in its northwest region. The United States Geological Survey (USGS) states that rare earths are a set of 17 metallic elements necessary in the production of high tech products. Vietnam is the world’s second largest reserve of rare earth materials, particularly critical ones, used in smartphone screens, wind turbines and magnets in electric vehicles. However, these reserves have largely remained untapped. Vietnam plans to restart its biggest earth mines next year, and is backed by Western forces to dent China’s dominance in the sector.
Vietnam’s government intends to increase their annual output of rare earth oxides to 60,000 tons by 2030, up from 4,300 tons in 2022, with Hanoi also aiming to process 2 million tons of rare earth ores. The reactivation of mining rare earth minerals will largely take place at the Dong Pao mine, with the government planning to auction several areas of the mine to investors before 2023 ends. Many foreign companies have already planned to bid on the project.
On 10 September US President Joe Biden visited Hanoi, where he signed an agreement to boost Hanoi’s ability to lure investors for its rare earth reserves.
What's In It For You?
For our readers in Vietnam, the reactivation of the Dong Pao mine can provide a ray of hope, with rare earth exploration potentially a great source of revenue and economic growth for Vietnam. For domestic investors, this will be a profitable chance to develop large-scale mining projects, which will further contribute towards promoting the growth of vietnam’s economy.
The mining of these rare earth minerals may also benefit everyday users of products such as phones, TVs, digital cameras, computers and more, with the resources used in such devices after they are refined and processed. Although high these products may not use large quantities of the resources, without them these products would not be functional. Being the second largest reserve of rare earth minerals is vital to technology and, having witnessed a boom in demand for these minerals, Vietnam has the opportunity to take advantage of this situation.
For our readers concerned with environmental projects, minerals are also commonly used to make wind turbines and solar panels, allowing the Vietnamese government to use renewable sources of energy. This also helps to explain Hanoi’s commitment during COP 26 to reduce CO2 emissions to zero by 2050. The use of wind and solar energy to generate electricity will help reduce air pollution emissions, a necessity for Vietnam after ranking 36/118 countries for air pollution in 2021. According to the International Trade Administration, Hanoi and Ho Chi Minh, Vietnam’s two biggest cities, are among the top 15 most polluted cities in Southeast Asia.
The new project also has the potential to challenge China’s dominance in producing rare earth minerals. Although China has only approximately one-third of the world’s rare earth reserves, they control about 60% of rare earth mining, 85% of processing capacity worldwide and 92% of rare earth magnet production. China has held a monopoly over rare earth elements since the 1980s, and with Chinese relations slowly becoming more volatile with the West, many countries are looking for alternative sources for these elements. This is where Vietnam benefits, taking advantage of this geopolitical situation by attempting to become a reliable supply base.
Vietnam’s crucial role in expanding the global rare earth supply chain away from China has sparked interest from foreign investors such as Australia’s Blackstone Minerals, who plan on bidding on the project. They are planning on investing around $100 million (£78 million) if they win the bid. Previously, Japan has taken advantage of Vietnam’s rare earth elements, after China threatened to halt their rare earth exports to Japan over a detained Chinese fishing trawler in 2010, which encouraged Japanese scientists to explore mines in Vietnam.
What happens next?
Readers may take note of the project’s developments during December, as foreign and domestic investors make their bids. Since Vietnam’s rare earth minerals have largely been untapped, it is uncertain how far the utilisation of it will impact China’s dominance in this sector. As the demand for electric vehicles increases, Vietnam’s role in producing parts for it may also increase.
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