By: FDi intelligence

In a strategic move to diversify the global supply of critical minerals, US-based MP Materials has formed a binding joint venture with Saudi Arabia's state-owned mining company, Maaden. The partnership aims to establish the Middle East's first rare earth processing facility. This initiative is a direct response to China's current dominance, which controls over 85% of the world's downstream rare earth processing.

The collaboration is a meeting of distinct strengths. MP Materials, which owns and operates the United States' only active rare earth mine and refinery, will contribute its essential technical expertise to the project. The Saudi partner, Maaden, will be the facility's operator and is committed to providing more than half of the required capital for the venture, securing a majority stake of no less than 51%.

The project is heavily backed by state capital, underscoring its geopolitical importance. The US government is derisking the investment by financing the entire American portion on a non-recourse basis. This public funding is a major driver, making the venture feasible and aligning with a broader US strategy to build an ally-based supply chain for critical minerals, as seen in recent pacts with Australia and Japan.

Saudi Arabia presents a conducive environment for the energy-intensive refining process. The Kingdom offers cheap and abundant energy, fast-tracked mining licenses, and regulatory regimes that are less burdensome for polluting activities. While Saudi Arabia's own rare earth reserves are currently small, the refinery is designed to initially process ores imported from other countries, with Brazil being a potential source due to Maaden's existing investments there.

The venture offers mutual strategic benefits. For the United States, it helps build crucial processing capacity outside of China and preempts Saudi Arabia from partnering with the industry leader. For Saudi Arabia, the project is a cornerstone of its ambition to develop an advanced mining and materials industry, leveraging foreign technology and investment to advance its domestic manufacturing agenda under Vision 2030.

The long-term plan for the facility is to eventually exploit Saudi Arabia's own mineral deposits. A key future asset is the Jabal Sayid deposit, which is rich in heavier rare earth elements that are in shorter global supply than the lighter variants. This partnership positions MP Materials as a trailblazer in the Kingdom's mining sector and marks a significant step in creating a new, geopolitically aligned value chain for these vital resources.