SUPPLY CHAIN
GM Helped Invent the Rare Earth Magnet. It Just Walked Away From the Only U.S. Factory Making Them.
Warren, Michigan. 1983. A GM lab scientist named John Croat found a way to fuse neodymium, iron, and boron into the strongest magnet the world had ever seen. A Japanese team led by Masato Sagawa made the same discovery at the same time. Together they gave us the NdFeB magnet — the tiny motor behind every EV, wind turbine, and guided missile built since.
GM patented its version. Then, over three decades, did almost nothing with it. China did. By 2026, Chinese firms make about 92% of the world's NdFeB magnets. America makes close to none.
So when a German firm called VAC opened a $500 million magnet plant in Sumter, South Carolina, late last year, it looked like a turning point. The plant can turn out nearly 2,000 tonnes of magnets a year. GM signed on as the anchor buyer. About 90% of the output was set to go into GM electric cars. The rest would go to the Pentagon. The deal was signed in 2023.
Last week, GM killed it. Reuters reported on Thursday that the automaker walked away from the contract. VAC has filed for arbitration. The reason is simple. GM is pulling back on EVs. It cut targets this year, slowed factory work, and no longer needs the magnets it promised to buy.
That leaves VAC with a half-billion-dollar plant and no buyer for nine-tenths of what it makes. The Pentagon's share — about 200 tonnes a year — is not enough to keep the lights on. VAC CEO Erik Eschen told Reuters that 90% of the plant's output was set to go to GM. Without it, the math does not work.
The timing makes it worse. China's 12-month pause on its toughest rare earth export rules runs out on November 10 — two weeks from today. If Beijing lets that pause lapse, every magnet buyer in the West will scramble for supply at the same time. And the one U.S. plant that could have helped fill the gap just lost its reason to exist.
This is the gap no one in D.C. wants to face. The government can pour billions into mines, plants, and magnet lines. The Pentagon can set deadlines — like the DFARS ban on Chinese magnets, taking effect January 1, 2027. But none of it works if buyers walk. GM helped invent this tech. It signed the deal. Then it left. The factory stands. The supply chain does not.
|
| Source: SMM · China domestic spot · Oct 22–27, 2026 |
|
SPONSORED
“Elon Is Not Showing this Publicly, But I Saw It”
Elon Musk recently shared a private video of his new product with a Silicon Valley insider called Jason Calacanis…
The venture capitalist who turned $100,000 into $100 million when Uber went public.
And Jason was stunned. He said:
"I've seen [Elon's new product], he's making sick progress. He's not showing it publicly…but wow… I think it will be the best selling product of all time."
I couldn't agree more.
In fact, when you click here and see this patent-protected technology…
I believe you'll want to buy one for yourself as soon as it's available.
We have so much to look forward to
ALSO THIS WEEK
PRICES
Ex-China Terbium Oxide Jumps 41% on U.S. Defense Buying
Fastmarkets said on October 6 that terbium oxide outside China surged to $5,000–$8,000 per kg in the week ended October 1. Two weeks prior it sat at $4,200–$5,000. Dysprosium rose too. The cause: U.S. defense firms racing to lock in supply before the January DFARS ban on Chinese magnets. Inside China, that same terbium oxide trades at $1,000 per kg. That gap — five to eight to one — is what it costs when one country controls the refining. And with the November 10 export pause expiry two weeks away, that gap could widen fast.
DEEP SEA
Oil Industry Group Launches Push for Ocean-Floor Minerals
The big oil and gas lobby group — NOIA — launched a new effort called Ocean Minerals Forward on October 23. The pitch: rocks on the sea floor hold nickel, cobalt, and rare earths. The same firms that drill deep water already have the robots and tools to get them. NOIA's Erik Milito said the U.S. cannot keep relying on other countries for the minerals that run its economy and its military.
PROCESSING
Rainbow Rare Earths Says Joburg Lab Work Puts It in Low-Cost Lead
Rainbow Rare Earths said on October 21 that lab work in Joburg has proved out a cheaper, lighter path for its Phalaborwa project in South Africa. The project sits on old mine waste in Limpopo province — no new hole in the ground, just old tailings put to work. Rainbow signed a deal with Neo Performance in September and wants to list on a U.S. exchange. CEO George Bennett told Proactive that the shift in how the West sees critical minerals is real. The U.S. DFC has put $50 million behind Phalaborwa.
SPONSORED
The Federal Reserve just warned another rate hike could hit soon…
And one ticker could give you the chance to add big money to your account.
But you need to be positioned before October 28.
|
|
AROUND THE MARKET
Chinese Scientists Map Turkey's Largest Rare Earth Deposit
A new study maps how rare earths formed in the Kizilcaoren deposit in western Turkey. The team was linked to China's Bayan Obo — the world's biggest rare earth mine. The finding: the deposit is real but won't be a major source any time soon.
China Northern Rare Earth Q3 Profit Doubles, Beats Forecasts
China's biggest rare earth miner posted Q3 profit up 161% from a year ago. Revenue rose 36%. Analysts said the results beat the firm's own forecasts. Higher prices and bigger sales volumes drove the gain across the board.
Moog and Niron Show Rare-Earth-Free Motors to the U.S. Army
Moog and startup Niron Magnetics showed off Iron Nitride motors at the AUSA meeting in D.C. earlier this month. Iron Nitride uses zero rare earths. The motors are built for Army trucks and weapons that must keep running even if Chinese magnet supply gets cut off. The two firms began working together in late 2025.
Torngat Metals Lines Up Partners for Strange Lake in Northern Canada
Torngat Metals has lined up funds and partners for its Strange Lake heavy rare earth site in northern Quebec. The firm holds C$165 million in government money, with C$110 million of that from Export Development Canada. Schneider Electric signed on earlier this year.
