Japan Industry to Establish Vietnam Rare Earth Supply Base

Japanese rare earth makers launch Vietnamese projects one after another. Showa Denko starts rare earth material plan in May and Chuden Rare Earth started the construction of the plant. Toyota Tsusho Corporation and Sojitz Corporation try to develop rare earth mine in Vietnam.

Japanese manufacturers try to secure stable supply source of rare earth as material of major parts of hybrid vehicle, electric vehicle, eco-friendly appliances and industrial machinery. However, Japanese buyers depend on China, which represents more than 90% of world rare earth production, for the all supply. Chinese government reduces the export gradually to keep reserve.

The limited supply lifts the international market. Metallic dysprosium price surges recently. The metal is used to improve neodymium-iron-boron magnet, which is used for motor of electric vehicle. Dysprosium supply is limited in a part of south China. Chinese dealers build the inventory with expectation for higher price. The limited supply and speculation increase the price to almost double of end 2009.

Japanese makers’ Vietnamese plants are to recycle rare earth from scrap from Japan and feed the metal to Japan and Southeast Asia. However, they eye rare earth mine in Vietnam. Vietnam, which is just south of rare earth rich part of China, is expected to produce rare earth. Toyota Tsusho and Sojitz try to develop the mine.

Japanese government also supports the intention through aid for infrastructure development for Vietnam. Japanese companies led mining project is expected to produce 5,000-6,000 tonnes of rare earth from 2011. The volume represents 20% of Japanese demand.