A mining site in Vietnam. (Photo: iStock)
The rare earth elements used in making electric vehicles and wind turbines are vital to renewable energy technology. Vietnam boasts abundant rare earth resources but suffers from a lack of advanced processing technology, leading to a continued decline in extraction volumes. Local officials have revealed that the Prime Minister has asked to check overall reserves and seek investments and technology transfers to boost production and meet the demands of the technology sector.
During a parliamentary inquiry on June 4, Minister of Natural Resources and Environment, Dang Quoc Khanh, emphasized that the current research and processing of rare earths heavily rely on technology transfers for deep processing of resources. He expressed hope that through additional investments or the establishment of joint ventures, Vietnam could acquire the necessary technology.
Rare earth elements, a group of 17 metals with unique electronic and magnetic properties, are critical global strategic resources used in various high-tech devices such as smartphones, electric vehicles, batteries, wind turbines, aircraft, and defense products.
Dang Quoc Khanh mentioned that Vietnam's potential rare earth reserves are approximately 30 million tons, but only 2.7 million tons have been evaluated. An additional 18 million tons are awaiting assessment. Furthermore, the country has about 5.8 billion tons of bauxite and 600 million tons of titanium. The primary provinces with known rare earth deposits are Lai Châu, Yên Bái, and Lào Cai.
According to the United States Geological Survey (USGS), Vietnam's rare earth reserves are the second largest in the world, second only to China. However, in 2023, the country's production was merely 600 tons, a 50% decrease from the previous year. In contrast, China produced 240,000 tons, and Myanmar, despite internal conflicts, produced 38,000 tons.
EV lithium battery module. Rare earths serve as crucial strategic resources for manufacturing mobile phones, EVs, batteries, and wind turbines. (Photo: iStock)
Vietnam's potential in rare earth elements has long been the focus of many foreign companies, including South Korea's Star Group Industrial (SGI) and China's Baotou INST Magnetic New Material Company, both of which announced plans to establish factories in Vietnam last year.
SGI is a supplier of magnets to Vietnam's major electric vehicle manufacturer Vinfast and South Korea's Hyundai Motor Company. The company's goal in Vietnam is to produce 5,000 tons of neodymium-iron-boron (NdFeB) magnets annually by 2025, enough to supply 2 million electric vehicles. Baotou INST Magnetic, on the other hand, is a supplier to Apple Inc. in Vietnam.
Vietnam's electric vehicle market continues to grow, spurred by government subsidies and tax incentives. According to BMI Research, Vietnam's electric vehicle market is projected to have a compound annual growth rate of 26% from now until 2032, with annual sales expected to reach 65,000 units. Currently, Vinfast holds the largest market share, selling 8,200 units in the first quarter of 2024, followed by South Korea's Hyundai and Japan's Toyota.
VinFast leads the EV market in Vietnam. (Photo: iStock)
The rare earth elements have the potential to create a magnetic effect, expanding Vietnam's electric vehicle production capacity. However, local corruption casts a shadow over the industry. On the inquiry platform, Dang Quoc Khanh also mentioned that local authorities must curb illegal rare earth mining and trading.
Last year, the Vietnamese government uncovered an illegal rare earth mining operation, arresting key figures such as Luu Anh Tuan, Chairman of Vietnam Rare Earth JSC (VTRE), and Doan Van Huan, Chairman of Thai Duong Group, along with four others. They were accused of forging value-added tax receipts and illegally selling a large amount of minerals during rare earth transactions.
VTRE, one of Vietnam's leading rare earth developers, had previously collaborated with Australian miners Blackstone Minerals and Australian Strategic Materials (ASM) to bid for the mining rights to Dong Pao, Vietnam's largest rare earth mine. This endeavor ultimately fell through following the arrests.
The Asia Times analysis suggests that Vietnam's crackdown on illegal rare earth activities has cast uncertainty over the industry's development, deterring foreign investors and indirectly providing growth opportunities for local Chinese rare earth businesses. Zachary Abuza, an assistant professor of political science and international relations at the National War College, described Vietnam's rare earth industry as reminiscent of the "Wild West," which has frightened away many companies.
Source: Vietnam News, Asia Times, Reuters, The Investor
