Vietnam plans to restart its biggest rare earth mine next year with a Western-backed project. In doing so, the country could rival the world’s largest, according to two companies involved, as part of a broader push to break China’s dominance in a sector that powers advanced technology.
The country that wants to increase its production of rare earth metals more than 460 times
Its aspiration is to become first or second in the world by 2030
Dong Pao is among the largest mines in the world and is attracting foreign interest. Australia’s Blackstone is considering a $100 million investment in Dong Pao.
The move would be a step towards the Southeast Asian country’s aim to build a rare earth supply chain, including developing its capacity to refine ores into metals used in magnets for electric vehicles, smartphones and wind turbines.
The unknown Chinese giant that dominates the world metal market
The US and Europe are rushing to secure supplies of key raw materials amid a push for greener technologies
As an initial step, Vietnam’s government intends to launch tenders for multiple blocks from its Dong Pao mine before the end of the year, said Tessa Kucher, an executive at Australia’s Blackstone Minerals Ltd, 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 She cited unpublished information from Vietnam’s Ministry of Natural Resources and Environment, which did not respond to requests for comment.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, Luu Anh Tuan, chairman of Vietnam Rare Earth JSC, the country’s main refiner and Blackstone’s partner in the project, told Reuters.
Rare earth mining project in Greenland from 2024 will meet Europe’s needs and reduce China’s dominance in the sector
Production could start as early as next year
The proposed restart of Dong Pao – the timing, scale and extent of foreign financial support is not yet known – comes at a time when many countries worry about their vulnerability to supply disruptions due to China’s stranglehold on strategic minerals and its disputes with the US and their allies. This year, Beijing imposed restrictions on exports of metals used in semiconductors, which an influential Chinese political adviser warned was “just the beginning”.
Vietnam has the second largest deposits of rare earths, according to the US Geological Survey. But they remained largely unused. Investments have been discouraged by low prices, which are effectively set by China due to its near-total monopoly on the world market. Visiting Hanoi this month to improve bilateral relations, US President Joe Biden signed an agreement to boost Vietnam’s ability to attract investors for its rare earth reserves.
In interviews with Reuters, 12 industry executives, investors, analysts and foreign officials described plans for Vietnam, including investments, that they said show how talk of de-risking supply chains to reduce dependence on China is turning into action . Some acknowledged the difficulties of building a rare-earth hub, but said the moves could make Vietnam a viable player while easing strategic concerns even if China remains dominant.
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Tessa Kucher said Blackstone’s investment in the project would be worth about $100 million if it wins. She added that the company is talking to potential customers, including electric car makers VinFast and Rivian, about possible fixed-price contracts that would protect suppliers from fluctuations and guarantee buyers a secure supply chain.
Making such deals will solve the hurdle faced by developers in Vietnam. In recent years, Japanese investors Toyota Tsusho and Sojitz have abandoned projects in Dong Pao after China increased supplies, driving down prices.
Still, despite the focus on reducing risk, it’s unclear whether clients would be willing to pay a premium for Vietnam, said Dylan Kelly of investment firm Terra Capital, noting that the market is generally opaque.
Source: Reuters
2023-09-25 15:30:37
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