Vietnam's rare earth resource a mother lode for foreign investors

The agreement with the U.S. on semiconductors and rare minerals exploitation will attract many investors from countries with rare earth processing and application technology to Vietnam, an expert says.

“Vietnam is one of the countries possessing extremely large rare earth resources that many semiconductor manufacturers crave,” Dr. Pham Quang Minh, director of the Institute for Technology of Radioactive and Rare Elements, told The Investor.

The U.S. Geological Survey estimates Vietnam’s rare earth reserves in Vietnam at about 22 million tons, accounting for 18% of the world’s total, just behind China with 44 million tons.

Minh said that while the whole world was racing to obtain supplies of important minerals like rare earth, Vietnam's exploitation and processing of rare earths and minerals did not match its potential.

In order to promote investment and form an effective and synchronous mineral exploitation and processing industry with advanced technology and modern equipment in line with world trends, the government has approved a plan on exploration, exploitation, processing and use of minerals in the 2021-2030 period, with a vision until 2050. Under this plan, about 2 million tons of raw rare earths will be mined each year in the 2031-2050 period.

From now until 2030, Vietnam will also complete licensed exploration projects at Bac Nam Xe and Nam Nam Xe rare earth mines in Lai Chau province; explore, upgrade and expand mines that have been licensed for exploitation and invest in new ones in the northwestern provinces of Lai Chau, Lao Cai and Yen Bai.

The country will promote the search for mining technology and markets associated with deep processing of rare earth minerals that have been licensed for exploitation in mines including Dong Pao (Lai Chau) and Yen Phu (Yen Bai). Work on the rare earth processing factory in Yen Phu commune, Van Yen district, Yen Bai province will also be completed.

In the 2031-2050 period, the country will continue to invest in expanding Dong Pao mine and invest in 3-4 new mining projects in Lai Chau and Lao Cai if there are investors committing to all stages of exploration, exploitation, processing and consumption.

Recognizing that Vietnam can become one of the world's top rare earth providers, a number of countries including the U.S., Japan and South Korea have showed their desire to cooperate and develop the industry.

Japan has been cooperating with Vietnam since 2010 as it looks beyond China for the supply of rare earths.

At the end of 2022, Minister of Industry and Trade Nguyen Hong Dien signed a cooperation agreement with his South Korean counterpart on the exploration and development of core mineral chains, including rare earths, in Vietnam for a stable global supply chain.

In June 2023, South Korea and Vietnam inked a memorandum of understanding on establishing a supply chain of rare earths and other important minerals to ensure a stable supply for Korean companies and encourage them to invest in Vietnam.

Most recently, in September 2023, Vietnam and the U.S. struck a deal on cooperation in semiconductors and rare minerals. “This is an opportunity that brings benefits to both sides,” said Dr. Minh.

The agreement will create conditions for Vietnam to promote international cooperation, access technology and attract investment, he said, adding this will also offer a chance for the country to attract businesses from the U.S. and other countries with rare earth processing and application technology.

At the same time, it will benefit domestic businesses and scientists through increased international cooperation to coordinate and gradually develop and master core technologies for processing rare earth ores.

Vietnam was working on policies to effectively manage and exploit this valuable resource, Minh said.

The government has approved a development strategy for the geology, minerals and mining industry through 2030 (with vision until 2045) as also a plan to explore, exploit, process and use minerals for the 2021-2030 period (with vision until 2050). It is also working on a draft Law on Geology and Minerals to replace the 2010 Mineral Law for submission to the National Assembly in 2024.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) sets conditions for foreign investment in the mining sector in Vietnam. The Vietnam-Korea Free Trade Agreement (VKFTA) and the EU-Vietnam Free Trade Agreement (EVFTA) also allow the establishment of joint ventures with foreign capital not exceeding 51% of the total. They also allow wholly-invested foreign firms to work in this field.

The Party Politburo's resolutions and the government's decisions have created important legal grounds for developing Vietnam’s mineral sector, including rare earths.

"To effectively manage and exploit rare earths, it is necessary to properly implement the approved plan. A coordination mechanism is also needed to resolve specific issues, with focus on promoting investment in science and technology and personnel training, and strengthening research and implementation capacity in the field of rare earths," Minh said.