In accordance with two companies engaged, Vietnam goals to reopen its largest rare-earths mine subsequent yr with a Western-backed challenge which may match the world’s largest, as half of a bigger marketing campaign to undermine China’s supremacy in a sector that helps gasoline refined know-how.
The initiative could be a step in direction of the Southeast Asian nation’s aim of boosting its skill to transform ores into metals utilized in magnets for electrical automobiles, cellphones, and wind generators.
Vietnam’s authorities goals to difficulty bids for quite a few blocks of its Dong Pao mine by the top of the yr, in accordance with Tessa Kutscher, an govt at Australia’s Blackstone Minerals Ltd, which plans to bid for not less than one concession. She referenced unpublished information from Vietnam’s Ministry of Pure Assets and Surroundings, which didn’t reply to remark inquiries.
The public sale date might differ, however the authorities intends to reopen the mine subsequent yr, in accordance with Luu Anh Tuan, chairman of Vietnam Uncommon Earth JSC, the nation’s main refiner and Blackstone’s challenge accomplice.
The proposed restart of Dong Pao – whose timeline, scale and diploma of overseas monetary help haven’t been reported beforehand – comes as many countries fret about their vulnerability to produce disruptions on account of China’s stranglehold on strategic minerals and its disputes with the US and its allies. Beijing this yr imposed export curbs on minor metals utilized in semiconductors, which an influential Chinese language coverage adviser warned was “just a start”.
In accordance with the US Geological Survey, Vietnam possesses the second-largest rare-earth reserves. Nonetheless, they’ve largely gone undeveloped, with funding deterred by low pricing primarily set by China on account of its near-monopoly on the world market. Throughout a go to to Hanoi this month to strengthen bilateral ties, US President Joe Biden inked an settlement to enhance Vietnam’s capability to draw traders for its rare-earth property.
In interviews with Reuters, 12 business executives, traders, analysts and overseas officers described plans for Vietnam, together with investments they stated confirmed how speak of derisking provide chains to scale back reliance on China is translating into motion. Some acknowledged the difficulties of forging a rare-earths hub however stated the gambit may make Vietnam a viable participant whereas assuaging strategic worries, even when China remained dominant.
Kutscher stated Blackstone’s funding within the challenge could be value round $100 million if it wins. She added that the corporate was speaking to potential shoppers, together with electrical automobile makers VinFast and Rivian (RIVN.O), about attainable contracts with set costs that may defend suppliers from fluctuations and assure patrons a safe provide chain.
Sealing such offers would tackle a hurdle confronted by builders in Vietnam. In recent times, Japanese traders Toyota Tsusho and Sojitz deserted tasks at Dong Pao after China ramped up provide, pummelling costs. The Japanese corporations didn’t reply to requests for remark.
But regardless of the give attention to derisking, it’s unclear whether or not shoppers could be able to pay a premium for Vietnam, stated Dylan Kelly, of funding agency Terra Capital, noting the market normally was opaque.
Requested about VinFast’s potential involvement, a spokesperson for dad or mum firm Vingroup stated the group’s entity answerable for raw-material procurement, VinES, had no present plans with Blackstone involving uncommon earths. He didn’t tackle subsequent questions on VinFast particularly.
Rivian didn’t reply to a request for remark.
Rivalling mountain move
Efficient exploitation of Dong Pao – which has sat dormant for not less than seven years, in accordance with an official at state-controlled miner Lavreco, which owns a concession – would propel Vietnam into the highest league of rare-earths producers.
However refining uncommon earths is advanced, and China controls many processing applied sciences. Dong Pao’s estimated deposits additionally have to be reassessed with fashionable strategies, in accordance with Blackstone.
Nonetheless, uncommon earths at Dong Pao are comparatively straightforward to entry and are largely concentrated in bastnaesite ores, in accordance with the Hanoi College of Mining and Geology.
These are sometimes wealthy in cerium, utilized in flat screens, and lanthanides, reminiscent of praseodymium and neodymium, which go into magnets.
Tuan stated VTRE hoped to win a concession that may permit it to extract about 10,000 metric tons of rare-earth oxide (REO) equal a yr, roughly one-third of the mine’s anticipated annual output. Manufacturing may begin across the finish of 2024, he stated.
That will put Dong Pao’s output barely beneath that of California’s Mountain Go, one of many world’s largest mines, which produced 43,000 metric tons of REO equal in 2022, in accordance with the USGS.
Vietnam additionally plans to develop extra mines. In July, Hanoi set a goal to provide as much as 60,000 tons of REO equal a yr by 2030. China set a home quota of 210,000 tons final yr.
These objectives would see Vietnam producing 5% to fifteen% of China’s projected output by the last decade’s finish, stated David Merriman, a analysis analyst at consultancy Venture Blue, who expects China to extend manufacturing over that interval.
Vietnam’s targets had been “ambitious, though they are not entirely out of the question”, he stated.
US encouragement
The US agreed throughout Biden’s go to to assist Vietnam higher map its rare-earths sources and “attract quality investment”, in accordance with a White Home truth sheet, a transfer that might encourage US traders to bid for Vietnam’s new concessions.
Reuters couldn’t decide whether or not concrete plans involving US traders exist at this stage. Officers on the US embassy in Hanoi, the White Home and Division of Commerce didn’t reply to requests for remark.
However latest US makes an attempt to achieve a foothold within the Vietnamese business didn’t succeed, stated John Rockhold, a advisor to the rare-earths sector and president of the Hanoi chapter of the US Chamber of Commerce, including that one such plan involving VTRE collapsed this yr.
That plan would have concerned the cargo to the US of uncommon earths refined by VTRE and attainable future funding in Vietnam of $200 million, in accordance with a private report for unspecified US traders seen by Reuters.
VTRE confirmed the cargo deal had foundered.
As a substitute, VTRE in April introduced a deal to produce 100 metric tons of rare-earth oxides this yr to Australian Strategic Supplies. ASM declined to touch upon Dong Pao’s exploitation.
Blackstone, which is a accomplice in that deal, operates a nickel mine in Vietnam and has decided that its processing facility within the nation may deal with ore from Dong Pao, in accordance with an organization assertion.
From ore to magnet
Finally, VTRE plans to play a task in the entire rare-earth business from ore extraction to the ultimate merchandise, stated Tuan, who along with his spouse owns most VTRE shares, in accordance with a listing of shareholders he confirmed to Reuters. Blackstone stated the possession data accorded with its evaluation following due diligence.
This isn’t a simple feat. The US at present exports its rare-earth ores to China for processing because it lacks its personal amenities.
An present VTRE manufacturing unit in northern Vietnam specialises in separating rare-earth oxides from the extracted ore. The plant has capability to course of 5,000 tons of REO a yr however the firm plans to treble that to accommodate enter from Dong Pao, Tuan stated.
As soon as separated, oxides are was metals to be used in magnets and different industrial functions. The metallization course of is managed by China, which produces 90% of rare-earth metals, in accordance with the US Division of Vitality.
However VTRE is working a pilot challenge to construct a metallization manufacturing unit with South Korea’s Setopia, stated Setopia, which has no earlier expertise within the sector.
The preliminary mixed funding could be round $4 million, largely from Setopia, a Setopia official instructed Reuters, with a plant probably prepared subsequent yr.
Within the downstream business, South Korean and Chinese language magnet corporations are set to open factories in Vietnam, Reuters reported in August.
Dudley Kingsnorth, a professor on the Western Australian Faculty of Mines at Curtin College, stated Vietnam had some approach to go, together with in enhancing environmental practices, to understand its rare-earth objectives.
Nonetheless, he stated, Vietnam “has the resources, the mining and processing expertise to provide alternatives to China”.