General Motors Ends Magnet Supply Contract, Faces Arbitration Over 2,000-Ton Plant

Key Facts

General Motors ended a long-term permanent magnet supply agreement with VAC, and the parties began arbitration proceedings after VAC’s U.S. unit, e-VAC Magnetics, referred the dispute to arbitration in July. According to Energy Fuels’ filing with the U.S. Securities and Exchange Commission, the dispute began in April 2026, and e-VAC was notified of the agreement’s termination on July 1. The company began arbitration proceedings on July 7, seeking a declaration that the termination breached the contract’s terms. It is also seeking the payments due under the agreement for the remaining term. A source familiar with the matter confirmed to Reuters that GM was the customer that terminated the contract with VAC’s U.S. unit.

The dispute centers on a contract linking the automaker to a magnet plant in Sumter, South Carolina, a project established to meet U.S. industrial demand for electric vehicle components. Initial production began in the fourth quarter of 2025, according to an Energy Fuels filing. The plant’s current capacity is 2,000 tons of permanent magnets annually, with the potential to increase to 12,000 tons annually. 90% of the plant’s output was slated for GM, with the rest allocated to the U.S. government, according to Reuters. The termination puts the plant’s future operations under scrutiny while the arbitration outcome remains unresolved.

e-VAC is seeking a ruling that the termination breached the express terms of the supply agreement, along with payment for the remaining contract period. Energy Fuels said the dispute could affect e-VAC’s future operations and that it is monitoring the matter in its liquidity planning and scenario analysis. The company added that the proceedings remain at an early stage and that the final outcome is uncertain. Management could not reliably estimate the likelihood, timing or amount of any payment recovery. The supplier’s financial exposure therefore remains contingent on the course and outcome of the arbitration.

The potential effects of the dispute extend to Energy Fuels’ proposed acquisition of VAC, as the company said the arbitration outcome could lead to adjustments to the purchase price. Energy Fuels expects to complete the transaction in early 2027, subject to customary closing conditions and regulatory approvals. That puts the arbitration among the factors that could affect the deal’s valuation before completion. The company did not specify in its filing how any particular outcome would affect the price. Any potential adjustments remain tied to the resolution of the dispute.

The contract cancellation comes as GM pulls back from some electric vehicle investments, after recording a $6 billion charge in January 2026 to unwind some of those investments. Reuters linked the pullback to the Trump administration’s withdrawal of incentives and tax credits for the sector. The company, however, has not publicly explained why it ended this particular agreement. In its third-quarter filing, GM said it was a party to two arbitrations involving long-term supply agreements for electric vehicle components and that it could not currently estimate a potential material loss or its range. It also recorded net costs of $3.6 billion during the nine months ended September 30, 2026, including losses on supply agreements and commercial negotiations, and expected additional costs during the year.

The dispute highlights the difficulty of building Western supply chains for permanent magnets in a market dominated by China, which produces about 90% of the world’s permanent magnets, according to Reuters. In this context, GM’s contract gave the U.S. plant a major buyer for most of its planned output. GM shares closed at $75.92 on October 23, 2026, according to EL7 data. The available evidence does not provide verified figures for the session’s high or low, so the trading update is limited to the closing price. The next step is the course of the arbitration, while Energy Fuels monitors its effects on e-VAC’s operations and the price of the expected VAC deal in early 2027.