General Motors terminated a long-term agreement to buy rare-earth permanent magnets from Vacuumschmelze’s South Carolina plant, prompting the supplier’s U.S. unit to seek damages through arbitration. The $500 million facility, which can produce just under 2,000 metric tons of magnets annually, had expected GM to take about 90% of its output under a deal intended to last at least 10 years. The termination raises uncertainty for the plant and highlights the challenges of building domestic supply chains for magnets, an essential component in many EV motors, while China accounts for roughly 90% of global production. Energy Fuels, which agreed to acquire VAC for $1.9 billion, has said the dispute could affect the acquisition price; reports also link GM’s decision to its efforts to improve the economics of its EV business.
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GM should have thought harder before canceling that magnet contract, as it only strengthens China's grip on EV components.
