Rare earth minerals are quite possibly one of the most important resources of the 21st Century, featuring in everything from complex computer parts and batteries to the United State’s 5th gen F-35 Lightning fighter. However, this vital natural resource suffers from one bottleneck: countries that contain it in exploitable quantities are an exclusive club, and you’re not in it. Currently, the PRC enjoys an almost monopoly over rare earth minerals, which they use to great effect by artificially throttling supply to bump up prices. Naturally, this monopoly on part of the supply chain for most modern technologies is worrying for nations that may come into conflict with Beijing, especially after they suspended exports to Japan over the Senkaku islands dispute.

As it turns out, Vietnam possesses one of the largest reserves of rare earth ores, the vast majority of which remains firmly in the ground. Of particular interest are the deposits in Nam Xe and Dong Pao, which contain 7.7 million tons and 3.17 million tons respectively, with Nam Xe having a potential further 10 million tons. Even more interesting, is that these reserves contain far higher quantities of HREE, such as europium and yttrium, than the average deposit. That makes Vietnamese mines much higher value and allows us to truly break into the market in a big way. The President has seen to make the exploitation and processing of REE a priority for the future economic success of the Vietnamese state and as such has set aside significant funds to achieve this.

What is to be Done

Three open cut mines each capable of producing 10,000 tons of rare earth elements annually will be dug in the Nam Xe area at an estimated cost of $700 million. This will be done in three phases, the first 5000 tons annually being complete in 2027, the second phase of 7000 tons in 2028 and the third phase in 2030. The mines will be dug and operated by the newly established Vietnam Rare Earth Company (VREC), a state-owned enterprise that will allow up to 49% foreign ownership in its ventures. In Dong Pao, VREC will attempt to partner with Japanese companies already operating in the region to open a new 5,000 annual ton open cut mine at a cost of $113 million, expected to open in 2028.

The Vietnamese government will place a ban on the export of unprocessed rare earth elements to ensure that processing happens domestically. This will also make it more profitable for companies using Vietnamese REE in their components to have their manufacturing process in-country, cutting down on transport costs.

A further $140 million will be invested in a rare earth processing park near port facilities in Haiphong, to ensure ease of export of the final product. The facilities will be capable of handling both stages of processing, turning the mined elements into rare earth oxides and then separating them based on market demands. The estimated output will be 15,000 tons annually and is expected to be complete in 2027. Another $70 million facility will begin construction in Hanoi in stages, designed to keep up with the expansions of the rare earth mine construction. $10 million in grants will also be made available to Vietnamese universities to conduct research on future applications of REE and improving on current applications.

One potential bottleneck for the project is the rural and mountainous nature of the deposits location, which will require significant infrastructure investments to make the products efficiently transportable. An asphalt road will be constructed down the mountain from Nam Xe into the city of Lao Cai, connecting the mines with the major roadway to Hanoi and Haiphong, while a new road will wind down the mountains from Dong Pao to QL279, which connects into the Lao Cai-Hanoi road. This will allow trucks to transport the goods if the mines begin operations before completion of the railway. A cargo line from Lao Cai to Haiphong will be constructed, with specific loading terminals where the new roads enter the valley to offload cargo from trucks onto trains.