(Updates with detail on arrests, context on rare earth mine...

(Updates with detail on arrests, context on rare earth mine auctions, share moves)

Oct 23 (Reuters) - Blackstone Minerals (BSX) on Monday said it will continue to prepare for an auction of rare earths concessions in Vietnam despite the arrest last week of the chairman of its partner Vietnam Rare Earth JSC (VTRE).

Blackstone Minerals, along with Australian Strategic Materials (ASM) (ASM) , in July signed a non-binding agreement with VTRE for securing rare-earth element opportunities in Vietnam, potential co-investment, and long-term supply deals.

"The company confirms that it remains committed and will continue to prepare for a potential auction of concessions in Dong Pao, when the Vietnamese Government decides to proceed," Blackstone said.

Police in Vietnam on Friday arrested six people on allegations of violating mining regulations, including VTRE's chairman, Luu Anh Tuan, who was accused of forging value added tax receipts in trading rare earths with Thai Duong Group.

Both Blackstone and ASM said they had no involvement in any investigation relating to Tuan.

The arrests come at a time when Vietnam's government is planning to auction new mining concessions for rare earths later this year at its biggest mine - Dong Pao - with the aim of challenging China's dominance in the sector.

"Vietnam has the potential to be a significant contributor to the global rare earth supply chain and Blackstone remains committed to helping Vietnam realise this ambition," Blackstone Managing Director Scott Williamson said.

Shares of Blackstone were trading 4.6% higher, while ASM shares declined as much as 7.1% as of 0113 GMT. (([email protected]; Twitter: https://twitter.com/sameer_manekar))