Highlights

• Vietnam holds 22 million tonnes of rare earth reserves, ranking second globally after China.
• The country lacks domestic processing capacity, thus mostly exporting raw ore.
• State policy in Vietnam emphasizes downstream value capture through licensing controls and export restrictions.
• Vietnam is leveraging trade agreements like EVFTA and CPTPP, along with partnerships with Japan, South Korea, Australia, and the U.S., to build non-China supply chains.
• Challenges include critical gaps in separation technology, infrastructure, and environmental enforcement.
• Vietnam's success depends on:
  • Unproven assumptions that reserves will translate to market power.
  • Foreign partners sharing guarded processing technology.
  • The sticking of governance reforms.
  • Global buyers being willing to pay premium costs for supply diversification away from Chinese dominance.

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This Russian-language paper (Zhiltsov & Hoang Van Tham, Vietnamese Studies, 2025) reads like a strategic briefing: Vietnam has the rocks, but not yet the refinery. The authors’ core story is simple—Vietnam wants to turn rare earth element (REE) reserves into geopolitical leverage and industrial value, using state policy, trade agreements, and foreign partnerships to climb from raw-material exporter to supply-chain power.

Key premise

Vietnam’s REE policy is framed as a state-led industrial and energy strategy designed to

1. monetize very large reserves
2. integrate into global supply chains, and
3. reduce dependence on Chinese technology and processing—while still balancing practical relations with China.

The authors repeatedly lean on a headline claim: Vietnam’s reserves are around 22 million tonnes, which they say places it second globally after China. They treat that “second place” status as a strategic opening created by the energy transition, EVs, wind turbines, solar, defense demand, and U.S.–China technology conflict.

What the paper says Vietnam is actually doing

Regulating REEs as a strategic sector.

The paper emphasizes licensing controls, national-security screening, and tighter rules for exploration, mining, and processing—including coordination with defense and security ministries before licenses are issued.

Pushing downstream processing.

A key policy signal: discouraging (and in some cases restricting) exports of unprocessed ore and nudging the market toward higher-purity products—an explicit attempt to keep value inside Vietnam.

Using trade architecture as supply-chain scaffolding.

European Union–Vietnam Free Trade Agreement  (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are presented as tools to attract investment, diversify partners, and integrate Vietnam into non-China supply chains.

Recruiting foreign technology—carefully.

Japan, South Korea, Australia, the U.S., and the EU appear as preferred partners, but the state still wants control of the sector’s strategic “command points.”

Major constraints (the “gravity” the authors don’t let you forget)

Technology gap and thin capacity.

The paper claims most output leaves as raw ore, with minimal domestic processing; it describes a sector that is resource-rich but capability-poor.

Infrastructure gaps in the north.

The main deposits are in northern provinces; the authors highlight logistics, roads, power reliability, and industrial clustering as limiting factors.

Environmental risk as a “license to operate” problem.

The paper stresses acid use, heavy-metal contamination risk, and weak waste control/monitoring—arguing that credibility with global partners depends on enforcement, not slogans.

China’s chokehold is structural, not just political.

China is portrayed as dominating mining and (especially) separation/processing, and using export controls and technology restrictions to defend that position.

Major Assumptions Baked In

At the heart of the paper is a set of ambitious—but unproven—assumptions. First, it presumes that large geological reserves can be translated into market power, meaning Vietnam can move from ore in the ground to reliable, scalable mining, separation, and downstream production. History suggests this leap is anything but automatic. The authors further assume that foreign partners will open the door to critical processing know-how, even as rare earth separation technology is tightly guarded, geopolitics are sharpening, and China maintains a decisive technological lead across the value chain.

The strategy also rests on governance working as advertised. The paper assumes that Vietnam’s legal and regulatory reforms will be enforced consistently, curbing contraband flows, reducing corruption risk, and giving investors confidence that rules will not shift mid-stream. Equally important is the belief that environmental oversight can tighten quickly enough to avoid the familiar rare-earth trap: rapid extraction followed by pollution, social backlash, and political reversal.

Finally, the authors wager that global buyers—especially in Europe, Japan, and the U.S.—will accept higher early-stage costs in exchange for supply-chain diversification away from China. If any one of these assumptions fails, Vietnam’s rare earth ambitions remain theoretical; if most hold, the country could reshape its position in the global critical-minerals economy.

Rare Earth Exchanges Takeaway

This is not a hype paper—it’s a blueprint with an implicit warning. Vietnam can become a serious node in global REE supply chains, but only if it builds the unglamorous middle: separation, waste control, infrastructure, and a workforce pipeline. Without that, “second place reserves” stays a headline—while value, technology, and pricing power remain elsewhere.

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