GM cancels magnet supply deal with VAC in the US — ECNS

General Motors has canceled a long-term agreement to supply rare-earth magnets with German manufacturer Vacuumschmelze (VAC), whose plant is located in Sumter, South Carolina, United States. GM accounted for 90% of the facility's orders, ECNS reports, citing Reuters.

VAC and GM announced plans to build a plant in the United States in 2021 and signed a long-term supply agreement in 2023. About $500 million was invested in the facility, and its annual capacity is nearly 2,000 metric tons of magnets. The contract with GM was designed for 10 years, and the products were planned for use in the company's electric vehicle motors.

Government support for the plant

According to VAC, about 90% of production was intended for GM, while nearly all of the remaining volume was for the US government. According to Goldinvest, cited by ECNS, at an early stage of operation the plant received funding from the Pentagon and $111.9 million in tax credits under a program supporting advanced energy projects.

In November last year, US Treasury Secretary Scott Bessent visited the facility in Sumter. In an interview with Fox Business, he said that the first neodymium-iron-boron magnet produced in the United States in 25 years had been manufactured at the plant, and also spoke of the US intention to reduce the supply chain's dependence on China.

More current news is available on the UA.News Telegram channel Telegram.

Costs and manufacturing expertise

According to ECNS, one of the obstacles to the development of rare-earth magnet production in the United States is their cost. According to the Fudan University Development Institute, producing one kilogram of mid-grade neodymium-iron-boron magnets costs about $26 in China and approximately $34 in the United States and other Western countries.

Another challenge is restoring professional expertise in rare-earth element separation and in the production of metals and alloys. In the 1990s, the United States moved a significant share of rare-earth raw material processing abroad due to high environmental compliance costs and low profitability.

Starting January 1, 2027, a White House executive order requires US defense contractors and other manufacturers to stop purchasing rare-earth magnets, tungsten, molybdenum, tantalum, and other critical materials from China, Russia, Iran, and North Korea.