Germany’s Vacuumschmelze (VAC), one of the few rare earth magnet producers outside China, said it is pressing ahead with a $500 million plant in South Carolina, backed by U.S. government funding, to expand production of permanent magnets used in electric vehicles, wind turbines and defense equipment.
The facility, due to open before the end of 2025, will produce just under 2,000 metric tons of magnets annually when fully operational. VAC said it has secured about $200 million in U.S. funding and tax credits for the project, with roughly 90% of output contracted to General Motors (GM.N) and the remainder to the U.S. Department of Defense.
“European governments are starting to wake up slowly, but they’re far behind what America is doing,” VAC Chief Executive Erik Eschen told Reuters. “We have a lot of technology in Europe and what we are doing right now is transferring a lot of that technology to the United States.”
The West has been seeking to curb dependence on China, which accounts for about 90% of global rare earth magnet output. Concerns about supply intensified after Beijing restricted magnet exports in April during a trade dispute with Washington. In July, the U.S. Department of Defense signed a multibillion-dollar deal with MP Materials (MP.N), which operates the only rare earths mine in the country.
Owned by private equity firm ARA Partners, VAC currently produces around 1,000 tons annually at its German site in Hanau. Eschen said the company is considering “one or two” new plants in Europe but noted that support from governments has been less robust than in the United States. “We are negotiating, discussing with several suppliers and also with several governments because they have a significant interest,” he said.
The European Union last year adopted its Critical Raw Materials Act aimed at building domestic capacity in rare earths and magnets, but Eschen said individual countries may be able to move faster. “European governments are starting to wake up slowly,” he said, “but they’re far behind what America is doing.”
