In a bid to reduce reliance on China, developed economies in the United States and Europe are eager to shift their focus. South Korean company LS Eco Energy has strategically entered the rare earth metals industry in Vietnam, marking its latest move to establish a supply chain outside of China.
Last week, the company announced that its board of directors approved an investment plan to invest 285 billion Korean won (approximately $19.4 million) in constructing a rare earth metal chemical plant in Ho Chi Minh City to supply materials for a magnet factory planned in the United States.
LS Eco Energy stated that the metal chemical plant in Vietnam will refine rare earth oxides from global mining companies. These materials are used in manufacturing robots, wind turbine generators, and permanent magnets for electric vehicle drive motors.
Other South Korean companies entering the rare earth market include Trident and POSCO. According to the Vietnamese Ministry of Industry and Trade, POSCO has hosted the Vietnamese Minister of Industry and Trade at least twice this year. The Ministry expressed its welcome for POSCO’s interest in cooperating on mining and refining minerals for magnet production. Australian mining companies Blackstone Minerals and ASM have also commenced business operations in Vietnam.
Last year, LS Eco Energy declared its goal of “dominating the desiliconizing market” by constructing a metal alloy plant in Vietnam.
Western countries led by the United States are seeking to accelerate their independence from critical mineral resources in China, offering opportunities to foreign companies like LS Eco Energy.
Lee Sang-ho, CEO of LS Eco Energy, stated, “Through this investment, we will advance our rare earth business from the planning stage to the actual investment stage and begin constructing production facilities. We plan to significantly expand our business portfolio from focusing on the cable sector currently to the core strategic materials sector.”
Rare earths are crucial materials for the manufacturing of defense military equipment like laser-guided weapons and advanced fighter jets, as well as for high-tech industries. The Chinese Communist Party controls 70% of global rare earth mining and 90% of rare earth processing. In recent years, rare earths have become a diplomatic weapon for Beijing.
Just this year, Beijing has threatened to impose export restrictions on rare earths and other critical minerals at least twice, prompting the United States and the European Union to expedite their search for alternative supply chains. As the United States leads the break of China’s monopoly on critical minerals, companies from Australia to South Korea are rushing into the Vietnamese mining industry.
The U.S. International Development Finance Corporation (DFC) has already approved multiple mining project financing plans, including providing $5 million to Canadian company Aclara Resources, which is mining a rare earth mine in Brazil to supply raw materials to a processing plant planned in the United States.
U.S. Treasury Secretary Bezent emphasized that Beijing’s threat to halt rare earth exports is a “real mistake.” He stressed that the U.S. will ensure alternative supplies within one to two years, at which point China will lose its rare earth leverage.
(Adapted from a report by “Nikkei News.”)