Rare Earth Exchanges

South Korea’s Star Group to Launch $80 Million Magnet Factory in Vietnam

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Highlights

  • South Korea’s Star Group Industries is investing $80 million in a new magnet factory in Vietnam’s Quang Nam province.
  • The factory will produce 4,000 tons of rare earth magnets annually.
  • It will create 1,050 jobs.
  • The target market includes global vehicle manufacturers.
  • The facility aims to diversify the rare earth value chain.
  • It aims to position Vietnam as a key hub in high-tech manufacturing.

Tri Duc, writing for The Investor in Vietnam, reports that South Korea’s Star Group Industries (SGI) is preparing to open an $80 million magnet manufacturing facility in Vietnam’s Quang Nam province (opens in a new tab) in February 2025. The factory, operated under SGI Vina Co., Ltd, is strategically positioned in Bac Chu Lai Industrial Park and will produce 4,000 tons of magnets annually, utilizing rare earth elements like Praseodymium Neodymium (PrNd), Dysprosium Iron (DyFe), and Terbium Hydride (TbH). The plant aims to create 1,050 jobs and attract global vehicle manufacturers, bolstering Vietnam’s role in the supply chain for industries like automotive and technology.

The new facility could significantly diversify the rare earth value chain by expanding Vietnam’s role in producing high-value magnet products. This aligns with global efforts to reduce dependence on a few dominant players, such as China, in the rare earth market.

 For Vietnam, the factory signals a shift toward higher-value manufacturing, potentially establishing the country as a key hub in the rare earth and automotive sectors.

Some Rare Earth Assumptions

Note the author assumes that Vietnam’s existing infrastructure and skilled workforce can support such a high-tech operation and that global manufacturers will be eager to invest—a big assumption to make.

All this raises questions about environmental impacts, the stability of rare earth supplies, and the long-term sustainability of the factory’s operations. Additionally, the piece largely focuses on economic benefits without addressing potential challenges, such as geopolitical risks or local community concerns.

Unanswered questions include whether Vietnam has policies in place to manage the environmental effects of rare earth processing and how the facility will source and sustain rare earth inputs amid global competition.

Plus, the standards of the magnets matter.  Most corporations rely on the Hitachi (Proterial Ltd) (opens in a new tab) patented technology.  The Chinese have advanced magnet standards, surpassing even the Japanese. We should note the U.S. is considerably behind the curve and should be heavily investing now to catch up.

China has been advancing its rare earth magnet technology, particularly in the development of high-performance neodymium-iron-boron (NdFeB) magnets. These magnets are essential components in various applications, including electric vehicles, wind turbines, and electronic devices. To maintain its competitive edge, China has implemented measures to protect its technological advancements in this field.

In December 2023, China’s Ministry of Commerce added rare earth magnet production technology and machinery to its list of Export Prohibited and Restricted Technologies. These moves formalized existing export restrictions, aiming to prevent the transfer of critical technologies related to the production of NdFeB, samarium cobalt, and cerium magnets.

Additionally, in October 2024, China introduced comprehensive regulations to tighten state control over its rare earth resources. These regulations are designed to safeguard China’s dominance in the rare earth sector, which is crucial for the development of clean technologies.

These measures reflect China’s strategic intent to maintain its leadership in rare earth magnet technology and to control the global supply chain of these critical materials.

In the meantime, a final Defense Federal Acquisition Regulation Supplement (DFARS) rule (opens in a new tab), published May 30, 2024, applies broader sourcing prohibitions to the language of DFARS 225.7018 and operative clause DFARS 252.225-7052 to prohibit the use and acquisition of magnets mined in China as of January 1, 2027.

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