When Japanese Prime Minister Takaichi Sanae arrived in Hanoi on May 1, she was driven from Noi Bai airport in a VinFast Lac Hong 900 LX. The car’s name evokes a mythical bird from Vietnamese tradition, while its design draws on the Dong Son bronze drum and bamboo groves, blending modern industry with cultural heritage.
Over the next three days, Takaichi and Vietnam’s Prime Minister Le Minh Hung signed six cooperation documents, launched the first project under Japan’s POWERR Asia Initiative, and identified “economic security including energy, critical minerals, semiconductors, AI, and space as new priority areas” in bilateral relations. The joint statement committed both sides to strengthening supply chains including rare earths in Vietnam.
Viewed through the lens of the Takaichi visit, Vietnam’s critical minerals strategy emerges as an effort to apply the country’s doctrine of strategic autonomy to the sector at the heart of global competition. Strategic autonomy was reaffirmed as central to long-term development at the Communist Party of Vietnam’s January 2026 congress.
The Domestic Architecture
Vietnam’s mineral governance is undergoing significant change. On January 1, 2026, the amended Law on Geology and Minerals took effect, classifying rare earths as a special strategic mineral, banning the export of unprocessed rare earth ore, and restricting exploration, mining, and processing rights to state-designated or state-approved enterprises. A separate national strategy on rare earths is due to be submitted to the relevant authorities in early 2026.
By deciding who extracts, what leaves, and on what terms, Hanoi is turning minerals into state-directed strategic assets. That shift lets Vietnam seek processing partnerships instead of just exporting raw ore.
The legal changes are partly a response to illegal rare earth extraction and smuggling networks. Between October 2023 and July 2024, the Ministry of Public Security arrested 14 people linked to illegal extraction at the Yen Phu mine in Yen Bai province, including the chairmen of two major firms. The investigation expanded to include a former deputy minister of natural resources and environment, the former head of the General Department of Geology and Minerals, and senior provincial officials. Defendants were charged with extracting and selling more than 291,000 tons of rare earth and iron ore, with a portion smuggled to China through falsified customs documents. The crackdown made clear that rare earths are now treated as a national security matter.
The critical minerals push sits within a wider restructuring of Vietnam’s energy and resource strategy. The revised Eighth National Power Development Plan, approved in 2025, scales up renewable and nuclear capacity to meet the electricity demands of a heavily industrializing economy, with Russian and South Korean cooperation now central to the two planned nuclear sites.
Together, these moves signal Hanoi’s intent to fold minerals and energy into a broader framework of strategic autonomy to ensure that resource governance, energy security, and industrial policy are aligned under state direction.
When Strategic Autonomy Meets Great Power Rivalry
Critical minerals competition has tightened sharply since 2023. China processes between 85 and 100 percent of global rare earth refining and dominates downstream segments of the battery and electric vehicle (EV) value chains. In a 2020 essay, Xi Jinping wrote that China should “tighten international production chains’ dependence on China” to deter supply disruptions by external actors.
That logic became concrete in April 2025, when Beijing imposed export licensing on seven heavy rare earth elements, forcing the United States and European carmakers to cut production or shut factories as permanent magnets ran short. Subsequent measures in October 2025 extended the same logic. A national supply chain framework in April 2026 embedded minerals into China’s broader state-driven approach to supply chain control.
The United States, by contrast, has mining potential but almost no domestic refining capacity, and cannot match China’s scale on any short timeline. Moreover, its munitions stockpiles depend on heavy rare earths. Washington has responded by building a coalition. Since February 2026, the U.S. has convened 55 partner countries at the Critical Minerals Ministerial, launched Project Vault as a strategic stockpile, coordinated the Forum on Resource Geostrategic Engagement, and signed 13 new bilateral mineral agreements. The goal is to integrate allied mining, refining, and manufacturing into a non-Chinese supply chain.
Vietnam holds the world’s sixth-largest rare earth reserves and is a U.S. Comprehensive Strategic Partner, yet it was absent from the Critical Minerals Ministerial. That absence reflects the underlying logic of strategic autonomy. Hanoi aims to keep its decision-making independent and avoid binary alignment with major powers, while diversifying partnerships to protect sovereignty and economic security. In practice, this means engaging selectively with Washington and Beijing, while pursuing the long‑term goal of building domestic (refining) capacity through Japanese, Russian, South Korean, and other partners that can deliver capital and technology without political strings.
The Execution Gap
Despite such ambition, three constraints currently limit how operational Vietnam’s strategy can become. First, domestic processing capacity for high-purity rare earth oxides remains thin. Dong Pao, the country’s largest known rare earth reserve, has yet to be developed even with multiple announced foreign partnerships. Most domestically extracted ore has historically been exported for refining elsewhere. The combination of weak deep-processing capacity and continued raw ore export leaves Vietnam with low value capture and high environmental risk.
Second, the economics of building large‑scale processing capacity are constrained by input costs. Industrial electricity costs averaged 2,204 Vietnamese dong per kilowatt-hour in 2025 and account for 25 to 35 percent of total expenses in adjacent heavy industries such as aluminum and tungsten production. Without a substantial reduction in industrial electricity costs or targeted subsidies, domestic rare earth processing at a competitive scale is hard to sustain.
Third, Vietnam’s flagship EV producer relies on Chinese battery cell technology and chassis integration for its current and planned production. Rare earth export controls reduce China’s leverage over Vietnamese ore, but not over the downstream components that drive Vietnam’s industrial exports. Diversification is therefore partial when the most valuable applications are structurally tied to Chinese inputs.
Takaichi’s visit shows that Vietnam can attract partners willing to deliver capital and technology without forcing alignment. Whether the model holds will depend on whether regulatory, industrial, and infrastructural capacity catch up with the strategic intent. As demand for critical minerals grows and the global supply chain order fragments, other resource-holding middle powers will face the same test in the years ahead.
