Vietnam, known as a 'rare earth powerhouse,' is changing its export policy to allow the overseas shipment of high-value processed rare earth products instead of raw ore. As Japanese and Korean companies have already established or expanded production facilities for refining, magnets, and metals locally, the key issue is whether Vietnamese raw materials will effectively connect with these supply chains.
According to local media outlet cafeF on October 7, the Vietnamese Ministry of Industry and Trade proposed a plan on September 30 to allow the export of processed rare earth products, including individual oxides, metals, alloys, alloy powders, and permanent magnets, provided they meet specific processing standards. This marks a shift from an earlier draft that included rare earths in the list of prohibited exports, now opening the door for processed products to be sold abroad.
'Processed' refers to products that have undergone advanced chemical and physical processing beyond mere extraction or initial impurity removal, transforming them into high-value items.
The export eligibility is limited to highly processed products, not raw ore or concentrates. Rare earth products must meet government-defined processing levels, such as separating individual rare earth elements into individual oxides rather than being mixed as total rare earth oxides. Intermediate materials that do not meet the standards will also be excluded from export eligibility.
Vietnam is also conducting tests to secure processing technology for its rare earths. The Hanoi People's Committee approved a trial production of total rare earth oxides with over 95% purity at the Hoa Lac Hi-Tech Park in early September. The facility can process 100 kg of ore per hour and can utilize up to 100 tons of raw materials from the Dong Pao mine. The produced materials will be used solely for analysis, testing, and technological improvement, not for commercial sale.
According to a mineral report released by the U.S. Geological Survey (USGS) in February, Vietnam is estimated to have about 3.5 million tons of rare earths, ranking fifth in the world after China, Brazil, Australia, and Russia. However, the mining volume was only 150 tons last year, a significantly low figure compared to its reserves. Consequently, the Vietnamese government is actively seeking ways to expand rare earth mining and production.
In Vietnam, Korean and Japanese companies are already expanding their rare earth production infrastructure. With a high proportion of advanced manufacturing, both countries are urgently seeking alternative supply chains for rare earths in response to China's weaponization of these resources.
Korea's LS Eco Energy is establishing a process to convert rare earth oxides into metals in Vietnam. The company announced plans in December to invest approximately 28.5 billion won to set up a production line at its Ho Chi Minh City subsidiary, LSCV, and in March, it began building a supply chain with Australia's Linus Rare Earths for raw materials, metals, and magnets.
LS Eco Energy aims to produce about 2,500 tons of rare earth metals annually, including samarium for defense applications and NdPr used in robotics and wind power generation. The company estimates that this volume can supply enough raw materials for the production of over 10,000 tons of permanent magnets. Additional investments in the samarium sector are also underway. On September 30, LS Eco Energy announced an additional investment of 11.6 billion won to build a 240-ton annual samarium metal production facility at the LSCV site, with trial production set to begin in December 2026. Linus will supply the raw materials, which LS Eco Energy will process into metals in Vietnam before supplying them to LS Cable for magnet production.
Additionally, SGI Vina, a subsidiary of Seongrim Advanced Industries, is already operating a magnet factory in the central Binh Duong Industrial Park. The registered capital for the business is approximately 26.81 trillion dong (about 1.38 trillion won). The company began mass production at a scale of 2,000 tons annually in March last year and plans to increase its production capacity to 5,000 tons, with an expansion to 8,000 tons by 2028.
In Japan, Shin-Etsu Chemical's subsidiary, Shin-Etsu Vietnam Magnetic Materials, operates production facilities in the Hai Phong Dinh Vu Industrial Park. According to environmental impact assessment documents for 2026, the production capacity for finished products is 4,590 tons annually, while two rare earth magnet alloy powder plants have capacities of 8,000 tons and 12,500 tons, respectively.
Shin-Etsu is also pursuing plans to expand its production capacity for rare earth magnet blocks from 12,480 tons to 14,880 tons. However, this is a planned expansion, not actual production. The company's 2025 annual report indicates that its Vietnamese facility performs both refining and recycling in the production process of neodymium magnets, and some raw materials, including rare earth oxides, magnet alloys, and rare earth metals, are imported.
However, the mere presence of foreign companies' production facilities in Vietnam does not guarantee that domestic rare earths will be immediately utilized in these plants. Currently, imported raw materials are being used in the local production lines of Shin-Etsu and LS, and for Vietnamese minerals to be integrated into the supply chain, separate supply contracts and suitable separation and refining technologies are necessary.
Meanwhile, Vietnam's new export policy focuses on fostering the domestic processed industry rather than exporting raw rare earths. With the production bases of Japanese and Korean companies already established, the future challenge will be to secure processing technology and a stable raw material supply system that connects Vietnamese rare earths to actual metal and magnet production lines.
* This article has been translated by AI.
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