HANOI/SINGAPORE, April 9 (Reuters) - Vietnam's Duc Giang Chemicals is in talks to sell a minority stake to a foreign strategic investor in a deal that could value the country's second biggest chemical company at up to $2 billion, two people with knowledge of the matter said.

The talks also include an alternative option for the investor to take ownership of the company's aluminum project, which mines and processes bauxite into alumina in the central highlands province of Dak Nong, one of the people said.

Duc Giang Chemicals is working with an advisor on the deal, the people said. Deliberations were ongoing and no final decisions have been made, they added, declining to be identified as the talks were private.

Hanoi-headquartered Duc Giang Chemicals, whose shares have gained 24% so far this year and which according to LSEG commanded a market value of almost $1.8 billion as of Tuesday, did not reply to requests to comment.

Proceeds raised will be used to further expand the company's businesses and production capacity, said one of the people.

Duc Giang Chemicals is one of the world's biggest exporters of yellow phosphorus, a key element to make electronic chips, fertilizer and lithium batteries, accounting for a third of global exports, the people added.

China, previously a major exporter of yellow phosphorus, has limited exports in recent years to protect supplies in its domestic market.

Duc Giang Chemicals has set a target of generating 1.1 trillion dong revenue from exporting yellow phosphorus this year, nearly half of its total income.

The company, which also produces detergent, fertilizers, chemical products and batteries, recorded a net profit of 3.2 trillion dong ($128.3 million) last year, down 46.2% from the year before.

Duc Giang was founded in 1963 as a state-owned enterprise. It has operated as a joint stock company since 2004, according to its website.

($1 = 24,950.0000 dong) (Reporting by Phuong Nguyen in Hanoi and Yantoultra Ngui in Singapore; Editing by Kane Wu and Jan Harvey)