General Motors has cancelled a long term supply agreement with a United States rare earth magnet plant whose owner Energy Fuels has agreed to buy for $1.9 billion, about C$2.7 billion, exposing a customer dispute that could change the acquisition price. GM was expected to buy about 90 percent of output from the $500 million Sumter, South Carolina plant operated by e-VAC Magnetics, a unit of Germany’s Vacuumschmelze, or VAC. Reuters reported the cancellation on October 22, citing regulatory documents and a person with knowledge of the situation, and the Northern Miner developed the acquisition implications on October 26.
The chronology matters. The disagreement began in April, before Energy Fuels signed the takeover agreement in June. The customer gave notice of termination on July 1, and VAC began arbitration on July 7, seeking to have the cancellation declared wrongful and to recover payments due over the remaining contract. Energy Fuels knew about the dispute while negotiating and amended the deal on October 13 to provide for potential purchase price adjustments tied to the dispute and repayment of certain debt, while telling Reuters the customer dispute “represents a substantial component of e-VAC Magnetics’ expected future revenues and operating plans.” GM’s own filing says a supplier of a component for EV traction motors initiated arbitration against it after it terminated a strategic sourcing agreement, and that it cannot estimate any reasonably possible material loss.
Energy Fuels is not retreating in public. A spokesperson told the Northern Miner on Monday: “We have no concerns about VAC’s commercial prospects, manufacturing capabilities and ability to meet customer specifications,” and said the company would not comment on the dispute while it remains in arbitration. The acquisition remains subject to closing conditions and Energy Fuels still expects it to close in 2027. The announced consideration includes $718 million in cash and about 65.9 million shares for the broader VAC business from private equity firm Ara Partners, and VAC has more than 1,000 customers, which is the diversification argument for proceeding.
The plant itself is built and specific: annual capacity of about 2,000 tonnes of permanent magnets at Sumter. Energy Fuels says VAC could take on new customers if the GM agreement does not remain in place, but their technical requirements could require significant additional capital spending. Reuters placed the dispute in its wider context: China produces about 90 percent of global permanent magnets, and the cancellation follows the Trump administration’s cuts to federal support for electric vehicles since 2025, which have changed US auto demand planning. Energy Fuels shares rose 1 percent to C$10.66 on Monday afternoon in Toronto, valuing the company at about C$2.8 billion, so the market is treating the dispute as a price negotiation risk rather than a deal breaker for now.