Highlights

• MP Materials announced a three-way joint venture with the U.S. Department of Defense and Saudi Arabia's Maaden to build a rare earth refinery in Saudi Arabia.
• Shares surged 271% YTD as the company evolves beyond its Mountain Pass operations into a multinational magnet-materials force.
• According to Simply Wall St, MP Materials remains 23% undervalued at $79.11 fair value.
• Significant execution risks exist, including:
  • Unproven Saudi refining capabilities.
  • Narrow customer concentration.
  • A stretched 44× sales valuation compared to the 1.9× industry average with 15% short interest.
• MP Materials may deserve a 'too strategic to fail' premium as the only meaningful U.S. domestic NdPr source with Pentagon backing.
• This positions MP Materials as an essential national-security asset similar to defense contractors.
• The strategic significance could potentially justify elevated valuation multiples despite traditional mining sector metrics.

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The emergence of a bold new triangle: MP Materials (NYSE: MP)  the Pentagon and Ma’aden?  Was America not sufficient for that future refining?

MP Materials stunned markets

With a three-way joint venture alongside the U.S. Department of Defense and Saudi mining giant Ma’aden to build a rare earth refinery in Saudi Arabia. Recent Simply Wall St coverage (opens in a new tab) frames the deal as a fresh flag planted on the global map—a sign that MP is evolving beyond Mountain Pass into a multinational magnet-materials force. With shares up 271% YTD and 187% over one year, the market clearly believes MP is entering its next strategic phase.

The JV aligns with Washington’s “ally-shoring” strategy: deploy U.S.-friendly capacity abroad while diversifying away from China’s monopoly on refining. On its face, the strategic logic holds.

But investors deserve a sharper lens.

The Optimism Narrative: Undervaluation or Overexuberance?

Simply Wall St leans heavily on a valuation model claiming MP remains 23% undervalued, with a “fair value” of $79.11 versus a ~$61 share price. The bullish stance hinges on:

• Structural demand for NdPr oxide and magnet metals,
• Pentagon capital and political backing,
• MP’s move downstream into magnets and metalmaking, and
• Policy shields that could protect margins long-term.

This narrative is coherent—but incomplete.

The Missing Risks: Refining Competence, Customer Concentration, and Saudi Execution

Rare Earth Exchanges analysis highlights several potential gaps:

1. Saudi Refining Is Not a Risk-Free Bet.

Building advanced separation capacity in the Gulf requires metallurgical know-how that MP has not yet demonstrated at an industrial scale. Saudi industrial zones remain largely untested for REE chemistry. We stand ready to take a different stance with material evidence.

2. MP Still Has a Narrow Customer Base.

At least some dependence on a few U.S. OEM and defense customers for larger contracts creates renegotiation risk—even with Pentagon support.

3. Valuation Looks Stretched.

MP trades at 44× sales, wildly above the 1.9× industry average. For a mining/refining hybrid, this implies perfect execution—rare in this sector.

4. Short Interest leans High.

With 15% of the float shorted, a sizeable cohort of investors is betting on a pullback.

These omissions do not make Simply Wall St’s analysis wrong—but they make it incomplete.

A Case for Higher Valuation: The “Too Strategic to Fail” Premium

There is also a credible argument that MP Materials deserves a structural valuation premium. No other U.S. company occupies a comparable position across the national rare earth industrial policy stack. MP controls the only meaningful domestic NdPr source, holds long-term Pentagon backing, and sits at the center of America’s effort to rebuild a cradle-to-magnets supply chain.

In geopolitical terms, MP is not merely another mining firm—it is an essential national-security asset—that U.S. treasure trove referred to by Rare Earth Exchanges.  Investors (and the government) may reasonably assign MP a “too strategic to fail” premium, similar to defense contractors or semiconductor foundries during early CHIPS Act expansion.

We could not disagree with this sentiment. At this juncture, that is, the early stages of rebuilding the nascent American rare earth supply chain,  MP Materials is in fact too important to fail.

So from this point of view, even if MP stumbles, Washington cannot allow it to fall. That reality supports a higher multiple than traditional mining peers and at least partially justifies today’s elevated valuation metrics.

Investor Bottom Line: Strategic Win, Execution Risk Unchanged

From this Simply Wall St vantage, MP’s Saudi JV represents a high-profile geopolitical victory. It reinforces U.S. strategic control, purports to weaken China’s refining narrative, and broadens MP’s global footprint. And the stock now prices in at least a near flawless future: rapid downstream expansion, zero commissioning setbacks, and unwavering government support.

The upside is real—but so are the risks, though increasingly cushioned by MP’s centrality to U.S. industrial policy. For now, the company stands in a class of its own.

Citation

Source: Simply Wall St, Dec. 3, 2025.

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