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Rare Earths : A Crack in Chinese Dominance

Some magnet manufacturers are choosing Vietnam over China to meet their customers' needs.


terres rares et drapeau de la chine

China currently accounts for 60% of the extraction and over 90% of the refining of rare earths, according to the International Energy Agency.



Is Beijing Losing Its Grip on Rare Earths?


China has long been the sole supplier of rare earths, essential metals for many industries. However, geopolitical tensions and export restrictions from Beijing have led countries to diversify their sources of supply. Vietnam, with significant rare earth reserves, is one of the countries that has heavily invested in this sector in recent years. The country could potentially become a serious competitor to China.


Vietnam is emerging as a significant player in the rare earths market. Two equipment manufacturers, one South Korean and the other Chinese, announced on September 12th that they would establish their magnet factories in the country. These factories will produce magnets essential for many high-tech products, such as electric vehicles, smartphones, wind turbines, and weapons. The decision by these two equipment manufacturers is good news for Vietnam, which is seeking to diversify its economy and develop its rare earths industry.


China, the world's primary producer of rare earths, is facing a threat to its dominance in this market. Two companies, one South Korean and one Chinese, have announced plans to establish their magnet factories in Vietnam. These magnets are essential components in many high-tech products, such as electric vehicles, smartphones, and wind turbines. Currently, China accounts for 60% of rare earth extraction and over 90% of refining. China also holds the world's largest known reserves, approximately one-third of the identified reserves. Vietnam and Brazil, each with 22 million tonnes of reserves, are potential competitors to China. These countries are making substantial investments in their rare earth sectors to diversify their sources of supply.



Nine mines in Northern Vietnam


Hanoi has announced an ambitious plan to produce 2.02 million tonnes of rare earths per year by 2030. The country possesses significant reserves of rare earths, but its production is still modest. In 2022, it reached 4,000 tonnes, marking a tenfold increase in just one year. Vietnam hopes to capitalize on the technological decoupling between China and the Western world. China is the world's primary producer of rare earths, but it has imposed export restrictions on these metals. Vietnam could attract foreign investors looking to diversify their sources of supply. Korean group SGI and Chinese group Baotou INST Magnetic have already announced their intention to build magnet factories in Vietnam. These factories will produce magnets essential for many high-tech products, such as electric vehicles and smartphones. The arrival of these factories is good news for Vietnam, which aims to diversify its economy and position itself as a global leader in rare earths.



China maintains its grip on rare earths


China is the world's leading producer and refiner of rare earths, giving it significant pricing power, which it doesn't hesitate to use to curb the emergence of competitors. Furthermore, China also dominates the production of magnets, a critical component in many high-tech products. According to the economic intelligence firm Adamas, China holds 92% of the global magnet market, compared to just 1% for Vietnam. These data suggest that Vietnam is not yet in a position to compete with China in the rare earths market.

For investors, it's important to have a good understanding of the dynamics of this market before diving in. Elio Strategy is a company specializing in rare earths investment, offering tailored solutions for investors of all profiles. Request your brochure: www.eliostrategy.com/brochure

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