Key facts
- GM cancelled its long-term supply deal with the US rare-earth magnet plant.
- The plant operator, VAC, has launched arbitration proceedings against GM.
- Energy Fuels is in the process of acquiring VAC.
- The dispute arose in April 2026, with the termination occurring on July 1.
- GM has been reducing its electric vehicle investments and sales.
General Motors, the largest customer of a US factory producing rare earth magnets for electric vehicles, has cancelled its supply agreement with the manufacturer, leading to arbitration proceedings. The move highlights the difficulties Western companies face in establishing domestic rare-earth production and reducing reliance on China, which dominates global supply. Energy Fuels, which is acquiring the plant's operator, Vacuumschmelze (VAC), disclosed in SEC filings that a customer terminated its supply contract on July 1, and VAC initiated arbitration days later. GM confirmed in its own filing that it terminated a strategic sourcing agreement, leading to arbitration sought by a supplier of EV traction motor components. The dispute first emerged in April 2026, and Energy Fuels was aware of it during its acquisition negotiations. VAC's new plant in South Carolina has a capacity of just under 2,000 metric tons per year, with 90% slated for GM and the remainder for the US government. GM has been scaling back its EV investments and sales, partly due to the withdrawal of federal incentives.