GM's efforts to secure U.S. rare earth magnet supply set to pay off - report

[Stacked metal plates of neodymium rare earth magnets 3D Rendering]
zhazhin_sergey/iStock via Getty Images

As China tightens its export controls on rare earths, which are essential for making everything from smartphones to electric vehicles, the U.S. government and companies are actively working to avert supply chain disruptions.

But General Motors (NYSE:GM [https://seekingalpha.com/symbol/GM]) moved to lock down domestic rare earth magnet supply since 2021. And it is set to be the only U.S. automaker with a large direct supply from multiple factories in the coming months, according to _The Wall Street Journal_.

In late 2021, GM (NYSE:GM [https://seekingalpha.com/symbol/GM]) and Germany's VAC announced plans for a U.S. manufacturing plant for rare earth magnets. The South Carolina factory's operations are expected to begin this fall, and scale to full capacity in early 2026.

Up to 90% of the factory's output will go to GM (NYSE:GM [https://seekingalpha.com/symbol/GM]), and the remainder supplying the Department of Defense (DOD), VAC's CEO Erik Eschen told _Reuters _last month.

GM (NYSE:GM [https://seekingalpha.com/symbol/GM]) also inked a long-term supply deal [https://seekingalpha.com/news/4479866-gm-signs-deal-with-noveon-to-curb-dependence-on-chinese-rare-earth-minerals] with MP Materials (MP [https://seekingalpha.com/symbol/MP]) in 2021, agreeing to invest in the rare earth miner's new plant in Texas.

The Pentagon later announced funding for the new VAC and MP (MP [https://seekingalpha.com/symbol/MP]) plants. "If they're only supplying the DOD, they're not going to be here in 5–10 years," Anthony Di Stasio, a senior defense official, told _WSJ _last year. "But if they're supplying the DOD and GM, then they have a much more stable future."

Then, the DOD in July agreed to invest $400M for a stake in MP (MP [https://seekingalpha.com/symbol/MP]), a move that will help the company ramp up production.

GM (GM [https://seekingalpha.com/symbol/GM]) also struck a multi-year supply deal with Noveon Magnetics, with rare earth magnet deliveries starting in July.

Shilpan Amin, GM's (GM [https://seekingalpha.com/symbol/GM]) procurement and supply chain chief, declined [https://www.wsj.com/business/autos/gms-rare-earth-gamble-pays-off-as-china-tightens-magnet-exports-b115ef72] to disclose how much of the automaker's rare earth magnet demand could be met with U.S. production.

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