MP Materials (NYSE:MP) shares jumped about 9% on Wednesday following the announcement of a joint venture with the US Department of Defense and the Saudi Arabian Mining Company (Maaden) to develop a rare earth refinery in Saudi Arabia.
Under the agreement, MP and the Pentagon will collectively hold a 49% stake in the joint venture, while Maaden will maintain a minimum 51% interest.
The US portion of the project will be financed by the Department of Defense, with MP providing technical expertise and marketing support.
The binding agreement follows a memorandum of understanding signed between MP and Maaden in May.
“We are honored that the US government asked MP to partner on a project of this magnitude and importance for America and its allies,” MP Materials CEO James Litinsky said in a statement.
“By combining MP’s technical expertise with the strategic vision of the US Department of War and Maaden’s capabilities and scale, the pieces are in place to fundamentally strengthen and diversify the supply chain.”
The deal builds on a broader US effort to reduce dependence on Chinese rare earth imports. In July, MP struck a separate agreement with the Pentagon that included an equity stake, price floor, and offtake arrangement.
Separately, Goldman Sachs initiated coverage of MP on Tuesday with a price target of $77, implying roughly 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,” the firm wrote in a note.
MP Materials traded hands at $64 in the early afternoon on Wednesday, having surged about 307% this year.