Vietnam, Rare Earths, and the Evolving China Plus One Strategy
Vietnam has benefited greatly from foreign firms' desire to de-risk from China. Can it free itself of dependence on the country's critical rare earth inputs?
Vietnam has evolved into a manufacturing hub for China Plus One, a strategy encouraging companies to reduce their reliance on China by diversifying production locations. While China is a major player in the rare-earth supply chain, controlling over 90% of global refined output and permanent-magnet production, Vietnam's critical mineral dependence on China is becoming more apparent.
Despite Vietnam's abundant rare earth deposits, its refining capacity remains limited, with the country's sole light rare-earth refining facility in Ha Nam province capable of processing only 5,000 tonnes annually. Vietnam's government has recently taken steps to address this gap, classifying rare earths as "special strategic" minerals and restricting their export.
This move comes amid increasing cooperation between Vietnam and Japan on rare-earth development, as well as investments from South Korea's Star Group Industrial and Chinese Baotou INST Magnetic in Vietnam. However, Vietnam's industrial policy aims to further bolster domestic production and localization, highlighting the need to strengthen its processing and refining capabilities to fully integrate its rare-earth resources into global production networks.
Written by urgent.news from The Diplomat's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
