VCI Legal – December 11, 2025

Vietnam’s breakthrough policy shift regarding rare earth resources in the draft amendments to the Law on Geology and Minerals represents not merely a legal adjustment, but a strategic declaration. In the context where rare earths are critical materials for defense technology (serving as the foundation for “numerous weapons systems, foundational technologies, and core technologies, particularly high-precision weapons” as noted in the user query, such as the F-35 stealth fighter jet and Tomahawk cruise missiles) and the global green energy transition, being among the countries with the world’s largest reserves, compels Vietnam to transform from a raw material supplier into a high-value-added processing center.    

During the discussion session on the draft amendments to the Law on Geology and Minerals, a dedicated chapter on rare earths was included, designating rare earths as strategic resources requiring unified national management, with explicit references to national defense and security considerations and technological applications in rare earth management. Also, during the National Assembly session, Delegate Trinh Xuan An noted: “When reviewing the laws of China, Japan, and the United States, I found that they all address rare earths in relation to national defense and security, particularly regarding defense matters, in very stringent terms. This is an opportunity for us to affirm rare earths as part of our national standing.” This article will analyze several regulations from China, Japan, and the United States concerning rare earths in the defense and security sectors. 

CHINA: Centralized Control and Export Leverage 

China is regarded by the United States as the world leader in rare earth mining, processing, and component manufacturing. The U.S. Geological Survey (USGS) estimates that China extracted 240,000 tons of rare earth minerals in 2023, while the U.S. extracted only 43,000 tons during the same period. China combines quotas, export licenses, and technology controls to both secure raw materials for domestic industry and maintain strategic advantages in the global market. This transforms rare earths into tools of diplomacy and geopolitics (extraterritorial jurisdiction), directly impacting the national defense security of importing countries. 

China has expanded rare earth export controls through notifications and catalogs requiring export licenses for numerous related items, including products containing rare earth components, aimed at protecting value chain advantages and using this as a security-economic lever. Beyond export quotas, management of domestic mining output through licensing, consolidation of major enterprises, and processing regulations prioritizes domestic value chains, significantly impacting global supply chains and forcing importing countries to restructure their sources. Finally, there is control over the use of rare earth processing technology anywhere in the world—a strategic defense mechanism to maintain monopolistic technological advantages in refining. 

THE UNITED STATES: Defense Industrial Policy and Market Intervention 

The U.S. rare earth strategy is primarily driven by national defense security requirements, institutionalized through the National Defense Authorization Act (NDAA). The U.S. deploys an interagency model to assess strategic material risks, with the Department of Defense (DoD) playing a leading role in identifying materials for weapons systems and coordinating with relevant agencies to assess supply chain risks. The U.S. is also advancing policies to domesticate the rare earth supply chain, including public-private investment and partnerships with enterprises to build domestic processing and magnet manufacturing capabilities. The U.S. government uses financial tools to ensure supply, considering imposing price floors and purchase guarantees to prevent price manipulation, particularly from China, which has forced competitors to close by undercutting prices over the past two decades. The National Defense Stockpile, also managed by the DoD, serves strategic materials to ensure self-sufficiency or cooperation with allies. 

Additionally, there are laws prohibiting sales to adversaries and requirements to reduce dependence on risky sources, though full implementation challenges remain. 

JAPAN: Supply Diversification and Recycling Technology 

A 2010 diplomatic dispute led China to temporarily halt rare earth exports to Japan, causing sharp price increases and exposing Japan’s dependence on external sources. Rare earth prices surged dramatically (for example, dysprosium and terbium tripled within a month), affecting Japanese automakers and high-tech industries, with some forced to suspend production. The 2010 supply shock experience prompted Japan to pursue a three-pillar strategy: supply diversification, recycling technology innovation, and strategic cooperation with allies. Japan is planning to recycle 13 rare earth metals necessary for high-tech production from old electronic devices. The government plans to mandate rare earth metal recycling from small electronic products. To overcome initial economic barriers, the Japanese government intends to subsidize the development of extraction and recycling technologies to ensure economic viability, demonstrating commitment to achieving technological autonomy. Japan and the United States signed a Cooperation Framework to secure the supply of Critical Minerals and Rare Earths in 2025. This framework commits to coordinated investment, processing, and stockpiling to minimize supply concentration risks. 

The Minister of Agriculture and Environment affirmed that rare earths would become an important resource for national development, based on the principle of “forming a closed value chain and minimizing raw material exports.” Restricting raw exports is a strategic economic tool to pressure foreign investors to conduct deep processing domestically, enabling Vietnam to capture higher value-added, reduce dependence on foreign refining supply chains, and promote technology transfer. Vietnam also needs to clearly define the list of strategic materials and national defense reserve mechanisms. Experience shows the need for a restricted technology catalog, technology export licensing mechanisms, and data security standards, while combining support for technology transfer under specific conditions for domestic development. Additionally, an interagency council should be established (Ministry of National Defense, Ministry of Public Security, Ministry of Agriculture and Environment) for project appraisal, export licensing, and stockpile management, learning from the U.S. interagency assessment model and China’s control mechanisms. 

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