In a significant development that marks the return of General Motors Co to the rare earth industry, the US automaker now plans on sourcing rare earth magnets for its future line of electric vehicles from new U.S.-based manufacturing facilities under two separate deals.
GM’s agreements with MP Materials Inc and privately-held Vacuumschmelze are the latest signs that marks GM drive to source rare earths domestically. It hopes to achieve this goal by 2025, said GM without disclosing the financial terms of the deal.
With the news reaching the market, shares of MP Materials Inc, which went public last year vide a special-purpose acquisition company (SPAC), were up by 6.5%. GM’s shares fell 1%.
The Biden Administration is providing tax incentives to automakers to invest and create EV supply chain jobs in the United States and reduce their reliance on China.
In July and in October, GM, which hopes to sell more than 1 million EVs annually by 2025, signed a supply deal with a California lithium project saying it would work with General Electric Co to study rare earth supply chains.
“The more we can recover natural resources for batteries and EVs from North America, process them here and manufacture them … the more value we can create,” said Shilpan Amin, GM vice president of global purchasing and supply chain. “Our strategy is to control our own destiny.”
As part of the deal, MP Materials will build a so-called neodymium-iron-boron (NdFeB) magnet facility in Texas that will supply enough magnets for GM to build 500,000 EV motors.
In a statement GM said, it does not plan to take a stake in the Texas facility, which is scheduled to open by 2023.
MP plans on sourcing the rare earths to build those magnets from its mine in California, where it is also building processing equipment. Currently, it relies on China to process the rare earths it extracts from its mine.
Incidentally, a Chinese company owns nearly 8% of MP’s shares. The ownership has raised concerns in Washington. Las Vegas-based MP continues to maintain that its an independent company and feels no pressure to favor Chinese interests.
The Pentagon has funded several MP-related projects saying the United States needs more rare earth mines.
According to Shilpan, GM and Germany-based Vacuumschmelze have agreed to jointly build a U.S. rare earth magnet plant the terms of which are still being finalized. The plan is to use locally sourced raw materials when production starts in 2024.
It was not immediately clear where Vacuumschmelze will procure rare earths since MP operates the only existing U.S. rare earths mine.