MP Materials said on Wednesday it would build a rare earths refinery in Saudi Arabia with the US Department of Defense and state-owned Saudi Arabian mining company Maaden to expand Middle Eastern processing of the critical minerals.

The news comes as Saudi Crown Prince Mohammed bin Salman is visiting Washington this week for the first time since 2018 as part of a push to underscore economic and security relationships between the countries.

Reuters reported in April that Maaden was considering a rare earths processing partnership with MP, which operates the only US rare earths mine.

COMPLEX REFINING PROCESS
Shares of MP, which in July agreed to a Pentagon investment that will make Washington its biggest shareholder and financial backer, rose 10% in afternoon trading.

Under the deal, MP and the defense department, through a joint venture, will hold a combined 49% stake in the Saudi refinery, with Maaden holding the remaining 51%.

Jefferies analyst Chris LaFemina said the deal reflects minimal financial risk for MP given Washington and Riyadh's involvement and should help the company ink more magnet supply deals in the near future. MP already has deals to supply Apple and General Motors.

China dominates global refining of the rare earths and magnets that are vital in several key technologies and has restricted exports during periods of trade tension, prompting Washington to seek alternative supplies.

Saudi Arabia's growing mining industry, meanwhile, is a key pillar in bin Salman's Vision 2030 program to diversify the economy beyond oil.

The facility will refine rare earths from Saudi Arabia and elsewhere into oxides of so-called heavy and light rare earths, which each have different commercial and military applications.

In the United States, MP has struggled to find supplies of dysprosium and terbium, two heavy rare earths used to make magnets for electric vehicles, fighter jets and other products.

The refined material will be used in the US and Saudi manufacturing and defense industries and sold to allied nations, according to MP.

MP has been working to perfect its rare earths refining process in California since at least 2020. The standard process to refine rare earths can be dirty, expensive and time-consuming, fueling a push by scientists for better methods.

Rare earths processors must contend with 17 metals, depending on a deposit's geology, each of which is nearly the same size and atomic weight, making separation complex.

Those rare earths must be teased out in a specific order, a logistical challenge that would prevent Maaden and MP from cherry-picking specific elements they may want while processing rare earths inside the kingdom.

MP said it was also in discussions to support or collaborate on magnet manufacturing in Saudi Arabia.

Separately, an MP executive appeared before a US congressional committee on Wednesday to encourage Washington to broaden its financial support for the minerals and manufacturing industries.

US President Donald Trump has ordered the Department of Defense to rename itself the Department of War, a change that will require action by Congress.