TLDR
- MP Materials stock jumped nearly 10% after announcing a joint venture with the U.S. Department of War and Saudi Arabian Mining Company (Maaden)
- The deal creates a rare earth refinery in Saudi Arabia, with MP and the U.S. holding 49% equity and Maaden maintaining at least 51%
- U.S. government will provide full non-recourse financing for the American contribution, making it capital-light for MP Materials
- Goldman Sachs initiated coverage with a Buy rating and $77 price target on the same day
- The joint venture follows a summer deal where the Pentagon secured rare earth supplies from MP with an equity stake and price floor guarantee
MP Materials stock climbed nearly 10% on Wednesday following two major developments. The company announced a strategic joint venture to build a rare earth refinery in Saudi Arabia while Goldman Sachs initiated coverage with a bullish rating.
The joint venture brings together MP Materials, the U.S. Department of War, and Saudi Arabian Mining Company (Maaden). Under the binding agreement, MP and the U.S. government will hold a combined 49% equity stake. Maaden will maintain at least 51% ownership.
The deal follows a strategic framework signed this week in Washington, D.C. between the United States and Saudi Arabia. The agreement aims to secure critical supply chains for both nations.
The structure proves favorable for MP Materials. The U.S. government will provide full non-recourse financing for the American contribution. MP will contribute its technical expertise in rare earth separation, refining, and global marketing capabilities rather than capital.
“We are honored that the U.S. government asked MP to partner on a project of this magnitude and importance for America and its allies,” said James Litinsky, founder, chairman and CEO of MP Materials.
The facility will process rare earth feedstock from Saudi Arabia and other global regions. It will produce separated light and heavy rare earth oxides. These materials support manufacturing and defense sectors in both countries and allied nations.
Goldman Sachs Backs MP Materials
Goldman Sachs analysts initiated coverage of MP stock with a Buy rating. The investment bank set a price target of $77.
The firm cited MP’s position as the largest rare earth miner in North America. Goldman also pointed to existing Pentagon contracts as a key factor in its bullish stance.
This summer, MP Materials secured a deal with the Pentagon for rare earth supplies. The agreement includes an equity stake by the U.S. federal government. It also provides a price floor for rare-earth materials and a guaranteed customer for MP’s current and future production.
Expanding U.S. Operations
The Saudi venture complements MP’s domestic investments. The company has committed over $1 billion to U.S. manufacturing capacity. These projects will create more than 1,000 jobs.
MP plans to expand heavy rare earth separation capabilities at its Mountain Pass, California facility. The company also aims to develop a second U.S. magnet manufacturing facility.
Wall Street shows strong support for MP Materials stock. Among 14 analysts, the consensus stands at Strong Buy. Eleven analysts recommend buying the stock while three rate it a Hold.
The average price target sits at $81.19. This represents potential upside of 26% from current levels. All ratings were issued in the last three months.
The Saudi refinery will diversify the global rare earth supply chain. Rare earth elements are used in electric vehicles, smartphones, guided missile systems, and advanced fighter jets.
MP Materials doesn’t need to provide capital for the Saudi venture. The company will contribute only its technical knowledge and operational expertise. This arrangement allows MP to expand its global footprint while maintaining focus on domestic operations.
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