South Korea's Star Group Industrial and China's Baotou INST Magnetic announce plans to construct NdFeB magnet production facilities in Vietnam.

South Korea's Star Group Industrial (SGI) announced their intention to construct a 5.0ktpy NdFeB permanent magnet production facility in Vietnam, with initial production from the facility scheduled for 2024, ramping up to capacity in 2025.  China's Baotou INST Magnetic (INST) has also announced that production at its Vietnamese magnet production facility will be commissioned by end-2023, in response to requests from clients to develop manufacturing capacity outside of China.   

The announcement comes a month after the Vietnamese government reported plans to increase rare earth production in the country to 2.0Mt mined materials, producing between 20-60ktpy REO by 2030, and increasing further to 40-80ktpy REO by 2050.  The expansion targets set by the Vietnamese government may seem ambitious, requiring a minimum five-fold increase in rare earth production over the coming 7 years, though developing an alternative supply chain to China is attracting investment opportunity for operations throughout the supply chain as is evident from the SGI and INST announcement.  

While Vietnam is geographically disparate from China, the question of Chinese ownership and influence is a murkier picture.  Chinese state-owned companies have been involved in the development of the Vietnamese rare earth industry, with Chinese-owned Shenghe Resources holding 90% of rare earth separator and metal producer Vietnam Rare Earth Company.  Similarly, other companies operating in Vietnam while not being Chinese owned, have a significant proportion of their facilities and capacity located in China.  Investment in magnet manufacturing by INST would only increase China’s influence over the downstream stages of the rare earth supply chain in Vietnam.   Because of these factors, a complete detachment from China and its influence is unlikely even with the development of notable Vietnamese domestic production at all stages of the mine-to-magnet supply chain.