by Duc Le, Vietnam Consulting Manager, Tractus
Across global supply chains, few materials now command as much geopolitical and industrial attention as rare earth elements (REEs). These metals underpin electric vehicles, offshore wind turbines, advanced electronics and modern defense systems, yet much of the world’s refining capacity remains concentrated in China.
China’s tightening grip hit home in 2025. In April, Beijing imposed export licensing requirements on seven rare earth elements, sending dysprosium prices up threefold. By October, China expanded restrictions to require licenses even for products made outside China using Chinese rare earth materials or technologies, effectively extending control across global supply chains.
In Southeast Asia, several countries are vying to attract the next wave of REE investment. Among them, Vietnam has emerged as one of the most intriguing contenders. The country holds 3.5 million metric tons of rare earth reserves according to the revised 2025 U.S. Geological Survey estimates, ranking sixth globally after China, Brazil, India, Australia and Russia. For site selection professionals, Vietnam presents a forward-looking strategic bet rather than an immediate plug-and-play solution. Current production tells the story: just 300 metric tons in 2024 compared to China’s 270,000 metric tons.
Even if early-stage processing facilities rely on imported concentrates, the prospect of domestic feedstock strengthens the case for long-term investment. Vietnam’s domestic rare earth deposits in northern provinces (particularly the Dong Pao mine in Lai Chau province with over 5 million tons of oxide reserves) provide optionality for integrated mine-to-refinery operations.
Thailand and Singapore, by contrast, would depend entirely on imported ores, while Indonesia’s vast mineral wealth has so far translated mainly into nickel-focused industrial policy rather than rare earths.
Structural Strengths in the ASEAN Comparison
Vietnamese officials increasingly frame rare earths as part of a broader strategy to climb the industrial value chain, alongside semiconductors, battery materials and specialty chemicals. The Ministry of Industry and Trade has emphasized discouraging the export of raw concentrates while courting investment in separation, hydrometallurgy, refining, alloy production and magnet precursor manufacturing.
Provincial governments are marketing coastal heavy-industry zones equipped with deepwater ports, chemical-handling corridors and centralized wastewater treatment as potential homes for REE processing complexes. This approach mirrors Vietnam’s earlier trajectory in electronics and apparel: Attract large-scale manufacturing, develop supplier ecosystems and gradually move into higher-margin segments.
When site selection consultants benchmark Vietnam against its regional peers, four strengths appear repeatedly:
Cost competitiveness: Industrial land in Vietnam remains relatively competitive with larger land banks than Thailand or Malaysia and much lower land costs than Singapore. Construction costs translate into double-digit percentage savings on capital-intensive REE projects needing extensive concrete works, tank farms, neutralization ponds and residue facilities.
Geopolitical positioning: Vietnam is widely viewed as a stable manufacturing base with balanced diplomatic ties to Western economies, Japan and South Korea. In August 2025, South Korea and Vietnam established the Korea-Vietnam Critical Minerals Supply Chain Center to coordinate mining, refining and downstream development. LS Cable & System committed $17.6 million to expand rare earth magnet supply chain facilities in Ho Chi Minh City.
Rapid industrial zone expansion: Vietnam continues to roll out new port-linked industrial estates faster than many ASEAN peers. Abundant greenfield sites allow bespoke layouts for projects requiring large safety buffers and tailings footprints. An upcoming railroad project, planned to be done by 2030, will connect northwestern provinces to eastern seaports, enhancing northern rare earth ore processing and logistics.
Manufacturing momentum: South Korea’s Star Group Industrial recently invested US$80 million in a magnet factory in Quang Nam Province operational in early 2025, increasing Vietnam’s magnet output from 3,000 to 4,000 metric tons annually. Contract electronics manufacturers Luxshare and Foxconn produce magnet-containing products like iPads and MacBooks in Vietnam.
Not Without Obstacles
Despite these advantages, Vietnam is not yet the most straightforward destination in ASEAN for REE refining.
Specialized human capital and technology: Rare earth refining relies on solvent-extraction cascades and metallurgical techniques mastered by relatively few process engineers worldwide. Malaysia and Thailand have deeper pools of experienced process specialists after decades of petrochemical operations. Vietnam’s workforce is young and adaptable, but major projects will require extensive training programs and expatriate staffing during ramp-up.
Beyond workforce, Vietnam faces structural constraints in technological capability. Rare earth separation and refining require advanced process engineering, proprietary extraction technologies and decades of accumulated operational experience.
Achieving Vietnam’s ambitions will depend heavily on attracting foreign direct investment from firms that bring capital, technology transfer and operational expertise.
Environmental permitting: In Vietnam, environmental oversight is tightening, reflecting both domestic priorities and investor expectations. Foreign companies often describe approval processes as less predictable than Singapore or Malaysia, particularly around radioactive residues and long-term tailings management.
The 2024 Geology and Minerals Law introduced a draft amendment recognizing the critical nature of rare earths, scheduled to take effect in 2026. With the right support from a particular industrial zone and local government, permitting may take 12 months to complete while some projects may take years.
Utilities for mega-scale plants: REE facilities consume vast quantities of power and industrial water. Vietnam’s industrial electricity prices averaged US$0.084 per kWh in 2025, with energy costs comprising 25% to 35% of total expenses for aluminum and tungsten production. Vietnam’s grid and treatment systems are improving, yet Malaysia’s chemical corridors and Singapore’s petrochemical complexes offer greater redundancy and reliability for very large installations.
International partnerships as strategic necessity: Vietnam’s rare earth ambitions explicitly depend on technology transfer through international partnerships and trade agreements.
How Vietnam Stacks Up
Malaysia leads on operational readiness today with established chemical processing infrastructure and experienced regulators, though at higher costs and with political sensitivity around REE projects. Thailand offers mature petrochemical clusters but lacks domestic rare earth resources. Indonesia has significant mineral endowment but remains focused primarily on nickel. Singapore excels as a financial hub but is too land-constrained for tailings-intensive refining.
Vietnam occupies a middle ground. It is still developing its operating environment but is arguably the ASEAN country with the largest long-term upside. Companies with longer investment horizons (5-10 years) and capacity-building experience may find Vietnam’s combination of attributes compelling. Those seeking immediate operational certainty (1-2 years to production) may find Malaysia or Thailand more suitable despite higher costs.
For now, the country occupies a distinctive position in the evolving global rare earth landscape. It is not yet the most operationally mature processing destination, but potentially one of the most strategically significant over the coming generation.
Tractus has a 30-year history of assisting clients in making informed decisions on the optimal locations to invest in and grow their business. For more, visit tractus-asia.com.