Owner of largest rare earth mine in Vietnam posts zero profit in 2022

Lai Chau-Vimico Rare Earth JSC (Lavreco) recorded revenue of only VND240 million ($9,800) with zero profit after tax in 2022, even though it owns the largest rare earth mine in Vietnam, Dong Pao, in the northwestern province of Lai Chau.

The company was established in 2008 with a charter capital of VND350 billion ($14.31 million under the current exchange rate) and six shareholders, with Vinacomin-Minerals Holding Corporation (Vimico), a member of state-run mining group Vinacomin, holding a 55% stake or VND192.5 billion. However, by the end of 2022, Vimico had contributed just VND148 billion ($6.05 million).

Despite its inception in 2008, Lavreco has yet to generate stable revenue and profit. In 2020, it reported a revenue of VND16.5 billion ($674,700) and a pre-tax profit of VND1.35 million ($55). In 2021, the respective figures were VND56.8 billion ($2.32 million) and VND11.6 million ($474).

Dong Pao mine, covering 132 hectares in Ban Hon commune, Tam Duong district, boasts the largest rare earth reserves in the country, with over 11.3 million tons.

The mine had its investment certificate approved by the Lai Chau provincial People’s Committee in 2013 and was licensed to begin exploitation by the Ministry of Natural Resources and Environment in 2014. However, it has been unable to start opeations due to difficulties in terms of the market, processing technology, and financial arrangements.

Lavreco has an investment plan to exploit and process rare earth ores at Dong Pao mine with three component projects and a combined investment capital of VND4.16 trillion ($170.1 million). They include a project to exploit and process rare earth ores at Dong Pao mine; the Dong Pao Lai Chau rare earth hydrometallurgy plant; and the Dong Pao Hai Phong rare earth extraction plant.

In 2012, Lavreco and Vimico signed a memorandum of understanding on cooperation in rare earth mining and processing with Japan’s Dong Pao Rare Earth Development Company. However, the Japanese partner later stopped cooperating so the company was unable to obtain investment capital and rare earth processing technology from Japan. Since then, the company has not found a new qualified partner that meets the requirements of state agencies, resulting in project delays.

According to a Vinacomin leader, in 2022 and 2023, competent agencies issued many guidelines and decisions related to rare earth exploitation, including the Prime Minister’s Decision No. 866/QD-TTg approving the plan on exploration, exploitation, processing and use of minerals in the 2021-2030 period, with a vision until 2050. Under the plan, which took effect in July 2023, Vietnam will exploit about 2 million tons of raw rare earth ores per year by 2030. This was the basis for rare earth enterprises to start mining.

Lavreco aims to quickly complete its search for partners to start exploiting and processing at the mine to become a leading enterprise in the industry in Vietnam.

Rare earths are minerals consisting of 17 elements with special magnetic and electrochemical properties. Rare earth elements are valuable, strategic minerals that play an important role in fields ranging from electronics, atomic engineering, machine manufacturing, and chemical industry, to metallurgy and even livestock and crop farming.

According to the U.S. Geological Survey, rare earth reserves in Vietnam reach about 22 million tons, ranking second in the world behind China.

Despite its great potential, rare earth exploitation in Vietnam remains very limited. With current technology, Vietnam can only export raw rare earths, and not separate their elements or process them for refinement, according to the Ministry of Natural Resources and Environment.