- Vietnam plans to restart its largest rare earth mine next year
- Dong Pao is one of the largest mines in the world and is attracting foreign interest
- Australian company Blackstone is planning a $100 million investment in Dong Pao
- Blackstone’s partner VTRE plans factory with Setopia from South Korea
- Concerns are growing over China’s dominance in strategic minerals
HANOI, Sept 25 (Portal) – Vietnam plans to restart its largest rare earths mine next year with a Western-backed project that could rival the world’s largest, according to two companies involved, as part of a broader push , curbing China’s dominance of a sector that drives advanced technologies.
The move would be a step toward the Southeast Asian country’s goal of building a rare earths supply chain, including developing its capacity to refine ores into metals used in magnets for electric vehicles, smartphones and wind turbines.
As a first step, the Vietnamese government plans to launch tenders for several blocks of its Dong Pao mine before the end of the year, said Tessa Kutscher, an executive at Australia’s Blackstone Minerals Ltd (BSX.AX), which plans to bid for at least one concession. She cited unpublished information from Vietnam’s Ministry of Natural Resources and Environment, which did not respond to requests for comment.
The timing of the auction could change, but the government plans 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 project partner.
The planned reboot of Dong Pao – the timing, scope and level of foreign financial support of which has not previously been reported – comes at a time when many nations are concerned about their vulnerability to supply disruptions due to China’s stranglehold on strategic minerals and its disputes with the US and their allies are worried. Beijing this year imposed export restrictions on minor metals used in semiconductors, which an influential Chinese policy adviser warned was “just a start.”
According to the US Geological Survey, Vietnam has the second largest rare earth reserves. However, they have remained largely unused as investment is deterred by the low prices that China effectively sets due to its virtual monopoly on the global market. During a visit to Hanoi this month to improve bilateral ties, US President Joe Biden signed an agreement to boost Vietnam’s ability to attract investors for its rare earth reserves.
In interviews with Portal, 12 industry leaders, investors, analysts and foreign officials described plans for Vietnam, including investments, that they said showed how talk of cutting supply chains to reduce dependence on China is being translated into action. Some acknowledged the difficulties in establishing a rare earths center but said the move could make Vietnam a viable player while easing strategic concerns even if China remains dominant.
Kutscher said Blackstone’s investment in the project would be worth about $100 million if Blackstone wins. She added that the company is talking to potential customers, including electric car makers VinFast and Rivian (RIVN.O), about possible fixed-price contracts that would protect suppliers from fluctuations and guarantee buyers a secure supply chain.
Closing such deals would overcome a hurdle faced by developers in Vietnam. In recent years, Japanese investors Toyota Tsusho and Sojitz abandoned their projects in Dong Pao after China increased supply, causing prices to fall. The Japanese companies did not respond to requests for comment.
But despite the focus on risk reduction, it is unclear whether customers would be willing to pay a premium for Vietnam, said Dylan Kelly of investment firm Terra Capital, pointing out that the market is generally opaque.
Asked about VinFast’s possible involvement, a spokesman for parent company Vingroup said that the group’s raw materials sourcing unit, VinES, currently has no plans with Blackstone related to rare earths. He did not specifically address subsequent questions about VinFast.
Rivian did not respond to a request for comment.
COMPETING MOUNTAIN PASS
Effective exploitation of Dong Pao – which has been dormant for at least seven years, according to an official at state-controlled mining company Lavreco, which owns a concession – would propel Vietnam into the top league of rare earths producers.
But refining rare earths is complex and China controls many processing technologies. According to Blackstone, Dong Pao’s estimated reserves also need to be reassessed using modern methods.
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However, according to the Hanoi University of Mining and Geology, rare earths in Dong Pao are relatively easy to access and are mainly concentrated in bastnäsite ores.
These are typically rich in cerium, used in flat panel displays, and lanthanides such as praseodymium and neodymium, used in magnets.
Tuan said VTRE hoped to secure a concession that would allow it to extract about 10,000 tonnes of rare earth oxides (REO) annually, about a third of the mine’s expected annual production. Production could begin around the end of 2024, he said.
That would put Dong Pao’s production slightly below that of Mountain Pass in California, one of the world’s largest mines, which produced 43,000 tons of REO equivalent in 2022, according to the USGS.
Vietnam also plans to develop more mines. In July, Hanoi set a goal of producing up to 60,000 tons of REO equivalent annually by 2030. China set a domestic quota of 210,000 tonnes last year.
Those targets would result in Vietnam producing 5 to 15 percent of China’s projected output by the end of the decade, said David Merriman, research analyst at consultancy Project Blue, who expects China to increase output over that period.
Vietnam’s goals are “ambitious but not completely out of the question,” he said.
US ENCOURAGEMENT
The U.S. agreed during Biden’s visit to help Vietnam better map its rare earth resources and “attract high-value investments,” a White House fact sheet said, a move that could encourage U.S. investors to opt for To promote Vietnam’s new concessions.
Portal has not been able to determine at this point whether there are specific plans with US investors. Officials at the U.S. Embassy in Hanoi, the White House and the Commerce Department did not respond to requests for comment.
But recent U.S. attempts to gain a foothold in Vietnam’s industry have been unsuccessful, said John Rockhold, rare earths sector adviser and president of the Hanoi branch of the U.S. Chamber of Commerce, adding that one such plan involving VTRE was that this year had failed.
That plan would have included shipping VTRE-refined rare earths to the U.S. and possible $200 million in future investments in Vietnam, according to a non-public report for unnamed U.S. investors seen by Portal.
VTRE confirmed that the supply contract had fallen through.
Instead, in April, VTRE announced a contract to supply 100 tonnes of rare earth oxides this year to Australian Strategic Materials (ASM.AX). ASM declined to comment on Dong Pao’s exploitation.
Blackstone, a partner in the deal, operates a nickel mine in Vietnam and has determined that its processing plant in the country can process ore from Dong Pao, according to a company statement.
FROM ORE TO MAGNET
Ultimately, VTRE plans to play a role in the entire rare earths industry from ore extraction to finished products, said Tuan, who along with his wife owns most of VTRE’s shares, according to a shareholder list he provided to Portal. Blackstone said the ownership information was consistent with its assessment following due diligence.
This is not an easy task. The US is currently exporting its rare earth metal ores to China for processing as the country does not have its own facilities.
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An existing VTRE factory in northern Vietnam specializes in the separation of rare earth oxides from mined ore. The plant has the capacity to process 5,000 tons of REO per year, but the company plans to triple this to accommodate Dong Pao’s input, Tuan said.
Once separated, oxides are converted into metals used in magnets and other industrial applications. According to the US Department of Energy, the metallization process is controlled by China, which produces 90% of rare earth metals.
However, VTRE is running a pilot project to build a metallization factory with South Korea’s Setopia (222810.KQ), Setopia said, which has no experience in the sector.
The initial total investment would be around $4 million, mostly from Setopia, a Setopia official told Portal, with a facility possibly ready next year.
In downstream industries, South Korean and Chinese magnet companies plan to open factories in Vietnam, Portal reported in August.
Dudley Kingsnorth, a professor at Curtin University’s Western Australian School of Mines, said Vietnam still has a long way to go, including in improving environmental practices, to meet its rare earths targets.
Still, he said, “Vietnam has the resources, mining and processing know-how to provide alternatives to China.”
Reporting by Francesco Guarascio @fraguarascio and Khanh Vu in Hanoi; additional reporting by Melanie Burton in Melbourne, Ju-min Park in Seoul, Trevor Hunnicutt in Washington, Mai Nguyen and Phuong Nguyen in Hanoi; Editing by David Crawshaw
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