General Motors cancels rare-earth magnet supply deal

General Motors has terminated a long-term supply agreement with e-VAC Magnetics, a unit of Germany’s Vacuumschmelze (VAC), leading to arbitration proceedings. The dispute involves a $500-million magnet plant in South Carolina designed to produce rare-earth magnets for electric vehicle traction motors.

According to regulatory filings and sources familiar with the matter, GM was the primary customer for the facility, which was slated to sell 90% of its capacity to the automaker. Energy Fuels, which is in the process of acquiring VAC for $1.9 billion, noted in SEC documents that a customer terminated its agreement on July 1. While GM’s recent SEC filings mention arbitration with a component supplier without naming the entity, sources confirmed GM is the party involved.

The cancellation highlights difficulties in establishing domestic rare-earth production in the West to reduce reliance on China, which currently produces approximately 90% of the world’s permanent magnets. The shift also reflects changes in the US electric vehicle landscape following reductions in federal support.