Audrey Berder

US defence suppliers have just over two months to prove compliant rare earth supply chains before Defense Federal Acquisition Regulation Supplement (DFARS) restrictions extend to the full mine-to-magnet chain on 1 January 2027. Domestic and allied rare earths separation capacity will not meet demand by that deadline. Existing Department of War (DoW) restrictions on rare earth magnet and tungsten purchases from China are to be expanded from where materials are melted or produced to mining, refining, and separation from 1 January 2027. The rules were first set out in 2021, but the deadline for implementation is approaching. Those who fail to comply risk liabilities or contract termination.

General Motors (GM) has cancelled its long-term rare earth permanent magnet (REPM) supply agreement with eVAC Magnetics, the US unit of Germany-based Vacuumschmelze (VAC), prompting an arbitration dispute. It comes following a 29% fall in US EV sales for GM in H1 2026 compared with H1 2025. Filings show a termination notice was issued on 1 July 2026, and eVAC began arbitration days later, alleging wrongful termination and seeking financial compensation. Signed in early 2023, this contract covered a minimum ten-year supply of neodymium-iron-boron (NdFeB) permanent magnets produced at the Sumter, South Carolina, plant with a capacity of 2,000tpa.