MP Materials stock surges on Pentagon-backed deal to develop rare earth refinery in Saudi Arabia

MP Materials surged Wednesday on a deal with the U.S. Department of Defense and the Saudi Arabian Mining Company, Maaden, to develop a rare earth refinery in the kingdom.

The U.S. rare earth miner’s stock was last up about 9%.

MP and the Pentagon will hold a 49% stake in the joint venture, the company said. Maaden’s position will be no less than 51%. The Defense Department will finance the U.S. portion of the venture with MP providing technical and marketing expertise.

The binding agreement to form the joint venture comes after MP and Maaden signed a memoranum of understanding back in May. The agreement will “significantly expand MP’s global footprint” and is structured to “ensure U.S. oversight and alignment with national security objectives,” the company said.

MP is also holding talks on a possible collaboration to standup magnet manufacuring in Saudi Arabia.

The Pentagon struck a landmark deal with MP in July that includes an equity stake, a price floor, and offtake agreement. The Trump administration is investing in MP as it seeks to reduce U.S. dependence on China for rare earth imports and stand up a domestic supply chain.

MP CEO James Litinsky has described the company as the U.S. “national champion” for rare earths. Rare earths are crucial inputs in U.S. weapons platforms, electric vehicles, clean energy technology, semiconductor manufacturing and consumer electronics.

Goldman Sachs initiated converage of MP on Tuesday with a price target of $77, implying about 32% upside from Monday’s closing price.

“We believe MP’s downstream expansion into refining and magnet production, accelerated by a partnership with the US government, will strategically position MP as a key supply chain component for rare earth refining and magnet production,” Goldman analyst Brian Lee told clients.