Vietnam’s plan to restart its biggest, rare-earths mine next year has left China nervous. News reports suggested that the Vietnam government plans to start it with the help of Western-backed project.
The development came soon after the visit of US President Joe Biden to Vietnam, when he signed an agreement to boost Hanoi’s ability to lure investors for its rare-earth reserves, a move that is likely to reduce reliance on China, a dominant country in rare earths that has exploited its position on several occasions. For instance, this year Beijing imposed export curbs on minor metals used in semiconductors, which an influential Chinese policy adviser warned was “just a start”. However, countries are looking for an alternative to China for rare earth deposits. Vietnam, for instance, has the second-largest rare-earth deposits, according to the US Geological Survey. But they have remained largely untapped.
To begin with, Vietnam’s government would launch tenders for multiple blocks of its Dong Pao mine before the year’s end. The auction’s timing could change, but the government intends anyway to restart the mine next year, said Luu Anh Tuan, chairman of Vietnam Rare Earth JSC (VTRE), the country’s main refiner and Blackstone’s partner in the project. Experts see the move as a big step towards the Southeast Asian country’s aim of building up a rare-earths supply chain, including developing its capacity to refine ores into metals used in magnets for electric vehicles, smartphones and wind turbines. The proposed restart of Dong Pao has given a ray of hope to many nations, which fret about their vulnerability to supply disruptions due to China’s stranglehold on strategic minerals and its disputes with the United States and its allies.
According to new strait times, the production at Dong Pao is expected to start in 2024. Dong Pao’s output is likely to be slightly below California’s Mountain Pass, which produced 43,000 metric tonnes of REO (rare earth oxide) equivalent last year. Besides, Vietnam has a plan develop additional mines. In July, Hanoi set a target to produce up to 60,000 tonnes of REO equivalent a year by 2030, although China set a domestic quota of 210,000 tonnes last year.
Those goals would see Vietnam producing 5 to 15 per cent of China’s projected output by the decade’s end, said David Merriman, a research analyst at consultancy Project Blue, who expects China to increase production over that period. The development has put China on the backfoot because the diplomatic closeness between the US and Vietnam will challenge its dominance on rare earths and widen gap between Vietnam and China. According to an article in Global Times, US support for Vietnam’s rare-earth development looks like a challenge to China, so it needs to be made clear that rare earths will not be a tool for the US to drive a wedge between China and Vietnam as the two neighbouring countries have the potential to cooperate in the industrial chain.
Washington’s interest in investing in Vietnam’s rare-earth industry is not a whim. With rare earths reportedly in short supply globally, the US is in urgent need of restructuring the specific supply chain, of which Vietnam is supposed to be a critical part. According to data from the US Geological Survey (USGS), Vietnam has the second-largest volume of rare-earth deposits in the world, topping 22 million tons. Vietnam’s production surged from 400 tons in 2021 to 4,300 tons in 2022, with its rank of production going up from 10th to sixth, Reuters reported, citing USGS data. The US is aware of the uncertainties surrounding Vietnam’s development as a rare-earth hub, which is why there are geopolitical considerations behind US-Vietnam cooperation on rare earths. It’s not just a case of luring Vietnam to sell its cheap rare-earth resources to the US.
If Vietnam relies entirely on the US to develop its own rare-earth industry, it is not conducive for the country to seek the maximization of interests from its rare-earth resources, especially when it doesn’t possess the most critical processing technologies. In this sense, Vietnam needs to protect its own rare-earth interests by maintaining cooperation with China. However, China has insisted that it needs to invest more in technological upgrading to ensure its leading position in the industrial chain, which is essential for cooperation