The two countries signed multiple mutually beneficial memorandums aimed at boosting economic ties.
U.S. President Joe Biden met with the General Secretary of the Communist Party of Vietnam Central Committee Nguyen Phu Trong for talks in Hanoi on Sunday. In a joint statement, the leaders vowed to deepen cooperation between the two countries, aiming to lift their relations to a Comprehensive Strategic Partnership from the partnership concluded under President Barack Obama in 2013. Almost half a century after the Vietnam War (1954-75), the two former enemies vowed to continue their path to normalization, citing steadily increasing extensive people-to-people relations from trade to tourism.
The deals signed over the weekend include a “Memorandum of Cooperation on semiconductor supply chains, workforce, and ecosystem development” aimed at boosting Vietnam’s semiconductor sector which in turn will support and supply the U.S. industry. In addition to semiconductors, the deals extend to other fields in technology, climate-related topics, and rare earth elements (REE). President Biden and Secretary Blinken also convened a U.S.-Vietnam Innovation and Investment Summit with industry leaders from both countries, discussing further technology and economic cooperation.
Could Vietnam Rival China’s Rare Earths Dominance?
Vietnam could become a significant global player in REE production and supply countries that currently depend on imports from China. The People’s Republic currently dominates REE production and refining (PDF) which are components of traction motors of electric vehicles or wind turbines, for example. After China announced export restrictions on germanium and gallium, prices for rare earths edged higher because of fears that these restrictions could be extended to other critical minerals.
Vietnam’s REE reserves amount to roughly 22 million tons, only topped by China’s 44 million tons, according to the U.S. Geological Survey (PDF). The Southeast Asian country recently announced plans to increase its REE production to 2.02 million tons per year by 2030, which could position it to rival industry leader China. To support Vietnam’s efforts, the Comprehensive Strategic Partnership concluded with the U.S. also includes a bilateral Memorandum of Understanding to strengthen cooperation in this sector and bolster supply chains of these critical minerals. The Biden Administration declared to aid in Vietnam’s REE sector development and help in exploring investment potential.
However, it is important to note that additional sources of raw REEs do not translate directly to less dependency on China, as the Middle Kingdom accounts for a staggering 90 percent of further downstream processing, according to a 2019 report by consulting firm Adamas Intelligence (PDF). Production facilities need to be matched by processing capabilities to rival China here.
Photo: iStock/Oleksii Liskonih
