Highlights
- Saudi Arabia and MP Materials sign MoU to develop integrated rare earth operations.
- The partnership has the potential to disrupt China’s global market control.
- MP Materials faces financial challenges with significant losses.
- The company is pursuing domestic rare earth vertical integration.
- The partnership represents a geopolitical strategic move to reduce reliance on Chinese supply chains.
- The goal is to establish a new critical minerals ecosystem.
In a high-profile but still preliminary move, Saudi state-backed mining powerhouse Ma’aden (opens in a new tab) has signed a Memorandum of Understanding (MoU) with U.S.-based MP Materials (opens in a new tab) to explore a vertically integrated rare earth supply chain in the Kingdom of Saudi Arabia. The agreement—announced during the U.S.-Saudi Investment Forum in Riyadh—outlines a collaboration to develop mining, separation, refining, and magnet manufacturing operations on Saudi soil.
While the deal reflects growing geopolitical alignment between Washington and Riyadh in the critical minerals space, Rare Earth Exchanges (REEx) notes this is only an MoU, not a binding development agreement. There is no confirmed timeline, financing, or defined resource base. However, Ma’aden’s vast capital access—backed by the Kingdom’s $700B+ Public Investment Fund ( (opens in a new tab)PIF)—signals the potential for serious long-term competition with China’s rare earth monopoly, especially if paired with MP Materials’ technical expertise and IP in magnetics.
Strategically, Saudi Arabia’s ambitions are clear: become a global hub for high-value critical mineral production and reduce reliance on Chinese supply chains. For MP Materials, this partnership could de-risk its domestic exposure, diversify revenue, and create optionality in an increasingly fractured global market. But critics will note the tension: a U.S. national security supplier now opening the door to offshore manufacturing—potentially drawing future magnet capacity away from American soil, depending on where capital flows.
The Chinese government, long accustomed to weaponizing rare earth pricing and supply to control global markets, will likely view this potential U.S.-Saudi axis as a serious threat. Expect China to respond with increased global outreach, new export quotas or pricing discounts, and attempts to sow discord among rising challengers by fragmenting Western-aligned supply chain alliances. However, the latest trade war, a temporary pause (90 days), and possibly not publicly known back-channel agreements could temper the behavior. We will have to see what unfolds.
Bottom line
This MoU reflects intensifying competition over the future of rare earths—and who controls the magnets that power the 21st century. Whether it’s another headline or a historic pivot depends on follow-through.
MP Materials—A Paradox
MP Materials, the most advanced rare earth producer in the United States, faces a paradox: it boasts a commanding position in the U.S. rare earth sector with fully integrated mining and imminent magnet production tied to a General Motors contract—but remains financially vulnerable.
Despite generating $216 million in annual revenue and showing 24.9% year-over-year revenue growth, the company reported a significant -48.4% net profit margin and—$104.6 million in net losses over the trailing twelve months. Its EBITDA stands at a deeply negative—$84.7 million, and its levered free cash flow is sharply in the red at—$211 million.
With a total debt load of $933 million and a debt-to-equity ratio of nearly 90%, MP is clearly burning through capital as it ramps up its magnet supply chain buildout, amid a high-interest-rate environment and volatile rare earth prices. As REEx has reported, an industrial policy with more consistent financial backing for key players, such as this national treasure trove, may be needed.
While MP’s $759 million cash reserve offers a temporary cushion, key financial ratios (such as a 68.4x EV/EBITDA and a Forward P/E of 24.1) indicate the stock trades at a premium despite its operating losses. Expectations of domestic supply chain breakthroughs and geopolitical tailwinds partly fuel this valuation. Also, REEx has access to deep experts who rave about the operational capability of key management.
Until recently (trade war), MP Materials sends a large portion of its separated rare earths to China for final processing—an uncomfortable contradiction for a company central to U.S. critical mineral strategy. Its long-term success hinges on monetizing domestic magnet capacity beyond General Motors and proving that rare earth vertical integration in the U.S. can be financially sustainable, before China’s pricing or the prospect of future Saudi competition tests that thesis. Of course, if they are partnered with Saudi and part of that ecosystem, they could possibly benefit.
Remember that the major Chinese players and the Saudi entrant are state-backed. How will that impact free market players in America?
RARE EARTH EXCHANGES (REEx): Where Critical Minerals Meet Critical Intelligence.
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