e VAC Magnetics Customer Dispute Exposes America's Permanent Magnet Vulnerability

Highlights

• e VAC Magnetics entered arbitration after a major customer moved to terminate a supply agreement underpinning its Sumter, South Carolina plant, triggering a lender forbearance on a $300 million loan.
• China controls roughly 90% of sintered NdFeB magnet production, and REEx estimates up to 25,000 tonnes of Chinese-origin magnet content may reach the U.S. annually through direct and embedded channels.
• U.S. producers including VAC, MP Materials, and Noveon are scaling capacity, but lack China's integrated ecosystem spanning separation, metals, alloys, powders, and high-volume customers.
• Non-Chinese dysprosium and terbium prices surged in early October as U.S. buyers competed for scarce heavy rare earth material ahead of tighter 2027 defense sourcing rules.
• Japan remains the deepest magnet-making base outside China, while South Korea is rapidly building capacity through partnerships with Lynas and other non-Chinese feedstock suppliers.