General Motors has cancelled a long-term deal to buy rare-earth magnets from a new US plant built largely to supply it, Reuters reported from company filings. The plant's owner is seeking damages in arbitration.
At a glance
- GM was due to take 90% of the plant's output of just under 2,000 tonnes of magnets a year.
- The supply agreement was ended on July 1, and the plant's owner started arbitration days later.
- Energy Fuels, which is buying the plant's parent VAC for $1.9 billion, says the purchase price may be adjusted.
Background
Permanent magnets made with rare earths such as neodymium are used in electric-vehicle motors, wind turbines and defence equipment, and China produces about 90% of them. The US has been trying to build its own supply. Germany's Vacuumschmelze (VAC) opened a magnet plant in South Carolina for that purpose, with General Motors as its anchor customer.
What happened
GM cancelled its long-term supply deal with e-VAC Magnetics, the US unit of German magnet maker VAC, Reuters reported on October 22. The two sides are now in arbitration, according to regulatory filings and a person with knowledge of the matter. VAC signed the deal with GM in 2023 to supply EV magnets from its new plant for at least 10 years.
Energy Fuels, which agreed in June to buy VAC for $1.9 billion, said in a US Securities and Exchange Commission filing that a customer ended its supply agreement on July 1. GM, in its own filing, said a supplier of a component for EV motors had started arbitration seeking damages after GM ended a sourcing agreement.
Why it matters for the plant
VAC opened the $500 million plant late last year with capacity of just under 2,000 tonnes of magnets a year. About 90% was meant to go to GM, with the rest supplying the US government. e-VAC says GM ended the contract wrongfully and is seeking damages.
Energy Fuels said it has "no concerns about VAC's commercial success", but told Reuters the purchase price could be adjusted depending on the outcome of the arbitration. GM and Energy Fuels declined to comment on the arbitration itself, which is confidential.
What it means
The dispute shows how hard it is to build rare-earth magnet supply outside China when demand is uncertain. GM has been selling fewer electric vehicles since the Trump administration withdrew EV incentives, and in January it took a $6 billion charge to unwind some EV investments. The filings do not say why GM ended the deal.
Our read
Outlook: neutral. One cancelled contract weakens US demand for magnets slightly, but rare-earth prices are set mainly by Chinese supply.
What to watch
- The outcome of the arbitration between e-VAC and GM.
- Any change to the $1.9 billion price Energy Fuels is paying for VAC.
- New customers for the South Carolina plant's magnets.
For information only, not investment advice.
Neodymium price in India
metalscost.com India reference price as of 2026-11-01.
Detailed analysis
Timeline
- 2026-07-01: The customer of VAC's US plant ends its supply agreement, according to Energy Fuels' filing.
- 2026-10-22: Reuters reports that GM cancelled the deal and that the two sides are in arbitration.
Demand Drivers
GM's retreat from electric vehicles has cut its need for EV motor magnets from the new US plant.
Government Policies
The withdrawal of US EV incentives has weakened demand for domestic magnet supply chains.
What could lift prices
- China still makes about 90% of permanent magnets, so supply outside China stays scarce.
- The US government is still a customer of the plant.
What could weigh on prices
- Lower EV sales in the US reduce demand for neodymium magnets.
- Magnet capacity meant for GM may need new buyers.
Country impact
| Country | Impact | Reason |
|---|---|---|
| United States | Medium | Its new domestic magnet plant has lost the customer meant to take 90% of its output. |
| Germany | Low | VAC, the German magnet maker, is now in a dispute with GM. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Electric Vehicles | Negative | GM's pullback from EVs is reducing demand for EV components. |
| Critical Minerals | Negative | The case shows the commercial risk of building rare-earth supply outside China. |
Who gains, who loses
- General Motors: It avoids a long-term commitment to buy magnets for EVs it is selling fewer of.
- VAC and Energy Fuels: They lost the plant's main customer and face a possible change to the purchase price.
Other ways this could play out
- If VAC wins the arbitration, GM could have to pay damages for ending the deal.
- If VAC finds new buyers, the South Carolina plant could still run near capacity.
Price risks
- Chinese export policy drives rare-earth prices far more than one US contract.
- A revival in US EV sales could restore demand for domestic magnets.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
United States
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