Major rare earth magnet companies from South Korea and China, including suppliers to Apple, are shifting to Vietnam.
Reuters reported that Star Group Industrial (SGI - South Korea, specializing in magnet production) and Baotou INST Magnetic (China) will join many other companies in the electronics and automobile sectors in moving assembly lines out of China. This is happening in the context of increasing trade restrictions, with customers even asking businesses to move.
SGI is investing $80 million in a new plant in Vietnam, with production set to begin in 2024. The plant will nearly double its current output of 3,000 tonnes a year from plants in South Korea and China. The company said it sources most of its rare earths from China but is looking for alternative sources in Vietnam and Australia, and plans to develop a processing facility in Vietnam.
Baotou INST Magnetic is expected to start operations early next month at a leased factory in northern Vietnam after receiving local approval in June. The major magnet company specializing in circuit design was added to Apple's supplier list in 2021. The company's expansion into Vietnam comes at the request of customers as it seeks to diversify its business amid rising trade tensions.
Luxshare and Foxconn are also among Apple's key suppliers that manufacture products with magnets in Vietnam, such as iPad tablets and MacBook laptops.
Rare earth magnets are a strategic industry because they are essential to the production of electric vehicles, wind turbines, weapons, and smartphones. China is currently the dominant country in magnets and the rare earth metals used to make them. China supplies 92% of global magnet production; the country also dominates in mining and processing the ore.
However, Vietnam is emerging as a competitor. Industry insiders say that Vietnam has the second-largest untapped rare earth reserves after China, along with a nascent related processing industry. For example, SGI’s project in Vietnam aims to produce 5,000 tons of high-grade neodymium magnets (rare earth magnets made from compounds of neodymium, iron, and boron) per year by 2025, enough for 2 million electric vehicles.
The US Department of Energy cited data from Adamas Intelligence showing that Vietnam is producing 1% of the world's magnets.
If SGI's plant were operating at full capacity, it would account for nearly 3% of global output by 2022, according to estimates by Project Blue, a rare earths consultancy. That's roughly half the amount of neodymium magnets imported into the United States last year, according to US trade data.
US officials have also shown increased interest in Vietnam’s rare earth potential, and South Korea signed an agreement with Vietnam in June to strengthen its supply chain of critical minerals.
Magnet manufacturers are attracted to Vietnam because of its low labor costs and access to multiple markets thanks to a series of FTAs that Vietnam has signed. They also want to reach customers based in Vietnam, such as automakers and electronics companies, who are increasingly wary of relying on China for supplies.
Vietnam is the only country outside China that has all stages of the magnet supply chain, from rare earth mining to downstream manufacturing, Reuters reported, citing an unnamed source.
Vnexpress.net
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