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The rare earth sector in Vietnam is experiencing growth.

The rare earth sector in Vietnam is experiencing growth.

Vietnam is currently increasing its mining efforts for rare earths, which are essential components in modern devices like electric vehicle batteries and smart phone screens. However, the industry is encountering challenges such as costly processing, environmental issues, and the prosecution of individuals involved in illegal mining and selling of minerals.

Vietnam possesses significant reserves of rare earth minerals, ranking second only to China who has maintained a strong monopoly since the 1980s. As Chinese relations with Western countries become increasingly unstable, numerous nations are seeking alternative sources for these elements.

According to Louis O’Connor, the CEO of Strategic Metals Invest, an Irish investment firm, China accounts for approximately 60% of the global production of rare earth elements. However, they process over 90% of these elements.

According to him, it was unwise to give one country control over vital resources that are crucial for the economic success and growing military strength of all nations.

According to O’Connor, although China possesses the largest amount of raw materials globally, its control over the intricate and expensive procedure of refining rare earth elements is even more significant. He noted that China has 39 universities specializing in metallurgy and produces around 200 metallurgists every week.

According to O’Connor, the most difficult, complex, and costly aspect is the transition from potential to final product. In the case of Vietnam, while they may possess the necessary deposits, they lack the human resources and engineering knowledge.

According to data from the U.S. Geological Survey, Vietnam’s rare earth mining production saw a significant increase, reaching 4,300 tons last year compared to just 400 tons in 2021. Vietnam has announced plans to process 2 million tons of rare earth ores and produce 60,000 tons of rare earth oxides annually by 2030. China’s current mining quota for rare earths is 240,000 tons, as reported by the Chinese government, to meet the growing demand for the electric vehicle industry.

Countries, including the United States, are keen on Vietnam boosting its rare earths production.

According to Le Hong Hiep, a senior fellow at the ISEAS-Yusof Ishak Institute in Singapore, the United States hopes for Vietnam to increase its role as a supplier and potentially replace China. This is due to concerns about potential risks associated with relying on China for rare earth supplies.

He mentioned that not just the United States, but also other countries such as Korea, Japan, and Australia are collaborating with Vietnam to advance their rare earth industry.

The President of South Korea, Yoon Suk Yeol, signed a memorandum of understanding in Vietnam in June to create a collaborative supply chain hub for rare earth minerals.

During a statement on June 23 with Vietnam’s president Vo Van Thuong, Yoon stated that an agreement had been reached indicating that there is a greater opportunity for joint development of rare earths due to their abundance in Vietnam.

During President Joe Biden’s trip to Hanoi on September 9, the United States signed a memorandum of cooperation in the rare earths industry.

During a digital press briefing on September 13, Marc Knapper, the U.S. ambassador to Vietnam, expressed that Vietnam has the potential to play a crucial role in global supply chains for critical minerals and rare earth elements. He also emphasized the importance of collaborating to ensure that Vietnam is able to utilize its abundant resources in a sustainable manner.


Nevertheless, several important rare earth companies in Vietnam have found themselves involved in controversy. On October 20, law enforcement apprehended six people for their involvement in illicit mining and tax offenses.

The chairman and chief accountant of Thai Duong Group, which runs a mine in Yen Bai province, were arrested by police for breaking rules related to natural resource exploration and accounting. The Public Security Ministry reported that the two individuals made $25.5 million by illegally selling rare earth and iron ore. Police also conducted raids on 21 sites in Yen Bai province and three other areas, confiscating approximately 13,700 tons of rare earth and over 1,400 tons of iron ore. Local news source VnExpress provided this information.

Although government statements did not state what made Thai Duong’s rare earth sales illegal, a source told Reuters raw Yen Bai mine ore had been exported to China to avoid high domestic refining costs, in violation of Vietnamese rules.

The leader of Vietnam Rare Earth JSC, Luu Anh Tuan, and their accountant, Nguyen Thi Hien, were apprehended for breaking accounting regulations while conducting rare earth transactions with Thai Duong Group. Similarly, Dang Tran Chi, the director of Hop Thanh Phat, and their accountant Pham Thi Ha were arrested for the same violation.

Examining corruption in Vietnam’s rare earth sector will be a priority for potential investors in the future, according to O’Connor.

He stated that the levels of corruption must be examined. For instance, if you are purchasing a metal that will be used in a jet engine or rocket, the purity levels must be guaranteed. The tracking of these metals is even more crucial than gold.

Vietnam is dedicated to the development of its industry.

According to Hiep’s statement to VOA, despite facing environmental and production expenses, Hanoi is dedicated to advancing the rare earths sector with limited economic benefits.

According to Hiep, Vietnam is currently focused on advancing this sector due to its strategic importance. Developing this industry and becoming a dependable provider of rare earth materials to the U.S. and its allies would significantly strengthen Vietnam’s strategic position.

“We will have to wait and see if that will be successful,” he said.

The expanding industry also raises environmental worries, especially since the suppression of environmental groups and civil society in Vietnam limits public discourse.

Courtney Weatherby, deputy director of the Southeast Asia Program at Washington’s Stimson Center, stated to VOA that the most significant obstacle will be determining how to manage the disposal of waste generated from mining activities.

She stated that it requires various individuals to ensure development occurs in a sustainable manner.

However, Duy Hoang, the executive director of Viet Tan, an unsanctioned political party, stated that the opportunity for external parties to voice their concerns about environmental and labor practices is decreasing.

According to the speaker, there is a decrease in the opportunity for civil society to express their opinions and several prominent environmental activists have been imprisoned. The absence of their voices is concerning and may be causing other activists to restrain themselves. The speaker emphasizes the importance of holding individuals accountable for their actions.