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Rare earths group MP Materials is partnering with the US military and Saudi Arabia’s state mining company to build a processing facility in the Gulf kingdom.
MP, which struck a lucrative deal with Washington this year, said on Wednesday it has entered a partnership with the US Department of War and Saudi state-backed mining company Maaden. The groups plan to develop a rare earths refinery that will process raw materials sourced from Saudi Arabia and other regions, and supply US and Saudi manufacturing and defence industries.
The metals are crucial to the production of permanent magnets that are used in a broad swath of industries, from defence to energy and technology. But their production is dominated by China, and western nations are now racing to build out alternative supply chains.
It comes as President Donald Trump rolled out a lavish Washington welcome for Saudi Crown Prince Mohammed bin Salman this week. The MP deal is among a series of agreements being hashed out by the two countries during a US-Saudi business forum held in the American capital on Wednesday.
The US government this year took an equity stake in Nevada-based MP and guaranteed a minimum price for some of the rare earths it produces, in an unusual deal that surprised the industry.
Under the terms of Wednesday’s deal, MP Materials and the US government combined will hold up to a 49 per cent stake in the new joint venture, while Maaden will own the controlling stake of “no less than” 51 per cent, the companies said.
On the US side, the Department of War — rather than MP — will provide the financing, the details of which were not disclosed.
The facility is expected to produce both heavy and light rare earths, the supply chains for both of which are dominated by China.
Heavy rare earths are especially hard to source outside China, which has wielded control over the materials this year by imposing a series of export limits that sent industry in the west scrambling.
The main output from MP Materials’ mine in the US is light rare earths. The company is developing a heavy rare earth separation facility in the US that it will feed with material sourced from its own mine and from third parties.
Saudi Arabia has identified mining as one of the main sectors the country seeks to grow as part of wider plans to diversify the kingdom’s economy beyond oil. The government also hopes that growth in mining would help provide materials for other industries they are trying to build, including electric vehicles and advanced manufacturing.
Maaden, which is majority-owned by the kingdom’s sovereign wealth fund, told the Financial Times in September that it was pursuing an aggressive growth strategy to develop the kingdom’s untapped mining resources, estimated by authorities to be worth some $2.5tn. The company is also keen to explore opportunities overseas through its international investment arm Manara.
MP chief executive James Litinsky said: “By combining MP’s technical expertise with the strategic vision of the US Department of War and Maaden’s capabilities and scale, the pieces are in place to fundamentally strengthen and diversify the supply chain.”