Vietnam new source for rare earths magnet companies

South Korea's Star Group Industrial (SGI) and China's Baotou INST Magnetic are set to open factories in Vietnam to explore rare earth deposits, according to Reuters.

Vietnam has untapped rare earth deposits second only to China's and a fledgling processing industry, giving the Southeast Asian country the potential to be a much bigger competitor, industry insiders said.

Vietnam was the third-largest trade partner for South Korea in 2022, and the two sides have ample room for greater cooperation in broader industries, particularly in minerals, as Vietnam has the second-largest reserves of rare earth minerals in the world, South Korea’s Ministry of Trade, Industry and Energy said in July.

Magnets, made from rare earth metals, are central to the manufacturing of such products as smartphones, electric vehicles (EVs), and wind turbines.

SGI, which supplies magnets to Vietnamese EV maker VinFast and South Korea's Hyundai Motor, told Reuters it is investing $80 million in its new Vietnam factory with production starting in 2024.

The plant would nearly double the company's current output of 3,000 tons a year from factories in South Korea and China, Reuters said Tuesday, adding that SGI described the investment as part of "countermeasures" against possible Chinese trade restrictions.

"China's policy on control of rare earths-related raw materials and technology is being strengthened, resulting in supply uncertainty," SGI was quoted by Reuters.

The South Korean firm added it sources most of its rare earths from China but is seeking alternative sources in Vietnam and Australia and plans to develop a processing facility in Vietnam.

SGI's Vietnam project targets 2025 output of 5,000 tons of high-end neodymium (NdFeB) magnets per year, enough for two million EVs.

Meanwhile, Apple supplier Baotou INST Magnetic is set to begin operations as early as next month at a leased plant in northern Vietnam after gaining local approval in June, two people familiar with the plans told Reuters.

INST, a large magnet firm specializing in circuit design, was added to Apple's supplier list in 2021. Its expansion to Vietnam follows requests from clients to diversify away from China amid growing trade tension, the two people said to Reuters, declining to identify the clients.

INST's initial investment is limited to a few million dollars, with a possible second phase involving more spending for the building of its own plant, the two persons said, declining to be named as they did not have clearance to discuss the matter.

Taiwanese giant Foxconn and China-based Luxshare are among major Apple suppliers who manufacture magnet-equipped products in Vietnam such as iPad tablets and MacBook laptops. Foxconn is strongly expanding its Vietnam manufacturing, while Samsung has so far invested about $20 billion in the country and is about to add more. More than half of Samsung smartphones are made in the country.

Meanwhile, the investment of its South Korean peer LG in Vietnam is about $7.5 billion. Luxshare operates six manufacturing plants in Vietnam, with three in Bac Giang province near Hanoi and three in the central province of Nghe An.

Apple supplier Wistron’s board of directors approved a proposal earlier this month to inject an additional $24.5 million into its new manufacturing subsidiary in Vietnam in line with the electronics maker’s business expansion and strategic planning.

The new investment will go to Wistron Technology (Vietnam) Co. Ltd., a newly established subsidiary of the Taiwanese electronics giant, which is also a major graphics processing unit (GPU) server module supplier of Nvidia Inc., a U.S. multinational technology company.

Wistron has so far invested about $300 million in Vietnam, not including the newly approved sum.

This June, Vietnam Rare Earth JSC and two Australian firms – Australian Strategic Materials (ASM) and Blackstone Minerals – signed an MoU on rare earth mining and production.

The deal is an extension of the cooperation agreement signed by Vietnam Rare Earth and ASM in April for the supply of rare earth oxides from Vietnam to ASM’s South Korean metals plant.

Blackstone said that it would work with Vietnam Rare Earth in obtaining mining licenses for the Dong Pao rare earth deposit in the northern province of Lai Chau. It said the Vietnamese firm would access Blackstone’s facilities and technical assistance from ASM to conduct a pilot flotation program for the Dong Pao deposit.

Blackstone also said that some electric vehicle manufacturers had indicated their interest in securing rare earth for their supply chains.