Highlights

• South Korea signs agreement with Vietnam to diversify rare earth mineral supplies, reducing 95.1% dependence on Chinese imports.
• A new Korea-Vietnam Critical Minerals Supply Chain Center will coordinate mining, refining, and downstream rare earth development.
• The partnership represents a strategic move to create alternative supply chains that bypass Chinese control of critical mineral markets.

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South Korea is moving fast to reduce its rare earth dependency on China, signing a new agreement with Vietnam to boost supplies of the critical minerals that underpin semiconductors, electric vehicle (EV) batteries, and advanced weapons.

The shift comes after months of shortages triggered by Beijing’s April export restrictions on seven rare earths and magnets used across defense, energy, and automotive sectors. The clampdown sent global dysprosium prices soaring threefold, according to the Korea International Trade Association. China currently controls 99.8% of the world’s dysprosium supply.

A New Southeast Asian Lifeline

At a Korea–Vietnam summit earlier this week, President Lee Jae Myung and Vietnamese counterpart General Secretary To Ram pledged to deepen cooperation. Vietnam will expand rare earth shipments, while Korea will contribute advanced processing technology. A new Korea–Vietnam Critical Minerals Supply Chain Center, to be established this year, will coordinate mining, refining, and downstream development.

One example: LS Cable & System, a leading Korean industrial group, is already building infrastructure in Vietnam to mine and refine rare earths with the aim of supplying Korea’s major automakers directly.

Numbers That Matter

South Korea’s dependence on Chinese imports remains staggering:

• 95.1% of rare earth metals
• 84.3% of rare earth compounds (2023, Korea Institute for International Economic Policy).

Diversifying with Vietnam, Australia, and European suppliers marks a significant attempt to shift these numbers, though it will take years before alternative supply chains fully scale.

Implications for the U.S. and Allies

For Washington, Seoul’s pivot has dual significance:

1. It reinforces U.S.-led efforts to build “friend-shored” rare earth supply chains that bypass Beijing.
2. It offers a potential model of how industrial allies can split roles—Vietnam as resource base, Korea as processing and technology hub.

Yet questions remain. Can Vietnam scale output fast enough without replicating China’s environmental toll? And will Korean firms gain secure offtake, or find themselves squeezed between Chinese buyback offers and U.S. tariff pressures?

For investors, the Korea–Vietnam alignment is more than diplomacy—it’s a hedge against supply shock in one of the world’s most strategic mineral markets.

Source: Korea JoongAng Daily (opens in a new tab) (Park Eun-Jee, Sarah Chea), Aug. 20, 2025

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