Vietnam's targeted rare earths surge muddied by lack of market transparency

The Vietnamese government's ambitious strategy to escalate the country's production of rare earths may confront significant hurdles in transparency and scalability.

The government said in a plan dated July 18 that it wanted to boost annual output of mined rare earths to approximately 2 million metric tons by 2030 and rare earth oxide (REO) equivalent production to 20,000-60,000 metric tons, Reuters reported. That would mark an enormous jump from the 4,300 metric tons of REO equivalent that the US Geological Survey (USGS) estimates Vietnam produced in 2022.

But the government's plan faces hurdles: Investors are feeling put off by a lack of transparency, while limited existing production makes it even more challenging for new producers to compete with dominant player China, with its much larger output.

"They hold some positions in mining, it's very small, some in processing, which is a little bit bigger in chemical reprocessing," Daan de Jonge, project manager at Benchmark Mineral Intelligence, told S&P Global Commodity Insights. "Even people who buy and sell with [Vietnamese companies] actually don't fully know the capacity of the people they're trading with, so their current position is one more of opportunity rather than a real solution to dependence on China at present."

Small player, big ambitions

Vietnam has significant rare earths production potential, however, and a legacy of rare earths mining that could boost the country's chances of achieving its output goals, experts said.

The country has 22 MMt of rare earths reserves, second only to China's 44 MMt, according to USGS data.

With such high volumes in the ground, Vietnam has room to rise far above its sixth-place global ranking for REO equivalent output in 2022. By comparison, top producer China's REO-equivalent output that year was 210,000 metric tons, or 70% of global production, according to USGS data.

Vietnam's future production plans rely in part on increased output from mines in its northern provinces, especially the Dong Pao mine, which is set to reopen next year, Reuters reported Sept. 24. Turning to brownfield sites such as Dong Pao could cut startup costs for Vietnamese miners.

"Given the sort of timely nature of these requests and this expansion plan, it's far more beneficial for people to turn to deposits which already have a wealth of exploration activity rather than greenfield activity, which would take a number of years to reach production," said Ross Embleton, senior analyst for rare earths at Wood Mackenzie. "I would certainly say Dong Pao and the surrounding deposits in that region are probably the most likely areas of activity."

Some miners have already started to get in on the action. Australia-based Blackstone Minerals Ltd. and Australian Strategic Materials Ltd. (ASM) announced the signing of a memorandum of understanding with rare earth processor Vietnam Rare Earth Joint Stock Company (VTRE) on July 26, shortly after the government's production plan announcement. One of the agreement's goals is achieving a mining license for access to the deposits at Dong Pao.

Geopolitical tensions — including efforts by automakers and governments like the US to cut reliance on China — could also increase the appeal of Vietnamese rare earths in certain markets, particularly if players outside of China enter an expanding Vietnamese rare earths industry.

"There's certainly a global push from a number of governments around the world to try and improve supply security of these key raw materials," Embleton said. "Vietnam has obviously identified an opportunity as it hosts a number of projects with rare earth resources [and it] has the opportunity to expand its capabilities in mining and refining and then at a later date, maybe, downstream into metallization, et cetera."

Lack of transparency

Optimism about Vietnam's rare earths production potential is tempered somewhat by a lack of transparency surrounding domestic industry and private producers in particular, experts said.

"The rare earths industry in general is not going to win prizes for being particularly transparent," said Stan Trout, owner of consultancy Spontaneous Materials. "You'll get some information from, say, a Lynas Rare Earths Ltd. or a MP Materials Corp. because they're publicly traded companies, and so they publish numbers and make comments and other things."

Investors want to know exactly where their money goes when they source or route materials through Vietnam, but they've had trouble extracting the data they need. Part of the problem lies in the setup of the Vietnamese mining industry, experts said.

"Vietnam is a very disjointed market player," de Jonge said. "It's not one where we can ... go through all [of a company's] feasibility studies and really do heavy handed due diligence."

Adding some confusion was the October arrest of six people accused of violating Vietnamese mining regulations, including VTRE Chair Luu Anh Tuan, as reported Oct. 20 by Reuters. Experts told Commodity Insights that they were unsure of the impacts the arrests might have on the country's plans for a rare earths scale-up.

Efforts to reach VTRE, Blackstone Minerals and ASM for comment were unsuccessful, but Blackstone and ASM issued separate Oct. 23 statements saying they were "not part of and [have] no involvement in" investigations related to VTRE's Tuan.

Build-out in question

The overall picture for Vietnam's future production potential is a mixed bag, experts said.

"I don't know if it's reasonable for them to scale up to, for example, even be processing half of the material that they want to by 2030," de Jonge said.

Exploration spending for lanthanides, a subset of the periodic table that mostly comprises rare earth elements, has been nonexistent in Vietnam since 2017, following a decline in spending from 2012–2016, according to S&P Global Market Intelligence data. The reverse has been true in places such as Australia, which has recorded a steady increase in lanthanide exploration budgets since 2019.

"If you look at other parts of the world ... there's a long list of projects which have done an awful lot of work and are much further along in development pathway than the projects in Vietnam, and even some of those are likely to not succeed," Embleton said.

"So on a sort of a global comparison, there's certainly room for more material, but they still need to be economically viable projects," Embleton said. "I imagine it's somewhere in the middle: There will be some successes, but there will certainly be some failures as well."

Vietnam's Ministry of Natural Resources and Environment did not respond to a request for comment.

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