In a move that could reshape the global landscape for critical minerals, the Pentagon, Nevada-based MP Materials, and Saudi Arabia’s Maaden have launched a joint venture to build a rare earths refinery in Saudi Arabia. Announced on November 19, 2025, this partnership aims to secure vital supply chains for materials essential to modern defense and technology, as reported by Aerospace Daily & Defense Report. The deal comes at a time when the world’s rare earths market is dominated by China, whose state-driven industrial strategy has left Western nations searching for alternatives.
The agreement, formalized during Crown Prince Mohammed bin Salman’s visit to Washington, grants Maaden—Saudi Arabia’s mining giant—a majority stake of no less than 51% in the new joint venture, while MP Materials and the Pentagon together will hold up to 49%. The U.S. Department of Defense will fully finance the American share of the project, following a $400 million investment in MP Materials just four months earlier. The refinery will process rare earth feedstock sourced from within Saudi Arabia, with a significant portion coming from the Jabal Sayid deposit, located roughly 350 kilometers northeast of Jeddah.
According to Saudi government estimates cited by Aerospace Daily & Defense Report, Jabal Sayid ranks as the world’s fourth most valuable rare earth reserve. It contains an estimated 552,000 tons of heavy rare earth elements—like dysprosium and terbium—and 355,000 tons of light rare earths, including neodymium and praseodymium. These elements are not just valuable—they’re indispensable. Heavy rare earths, in particular, are critical for manufacturing high-performance permanent magnets, which are used in guidance systems and motors for combat aircraft, submarines, and missiles, as well as in lasers, night vision goggles, and sonar systems.
“Given the kingdom’s substantial reserves of heavy rare earth elements, this partnership ... will play a critical role in reducing dependence on China, particularly following a year of pronounced volatility in global access to heavy rare earths,” said Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, in a research note dated November 19. The volatility she referenced stems from China’s near-complete control over the global rare earths market—a dominance maintained through a highly coordinated state-enterprise system.
China’s grip on rare earths is no accident. According to an in-depth analysis in Discovery Alert, China holds about 70-75% of the world’s rare earth processing capacity, with 97% of that controlled by state-owned or state-controlled enterprises. The country’s approach is fundamentally different from Western market models. Instead of relying on private investment and market forces, China treats rare earth supply as a strategic national infrastructure, with oversight and direction coming straight from the Communist Party. This system enables rapid mobilization of resources, coordinated policy implementation, and seamless technology transfer between research institutions and commercial enterprises.
The architecture of China’s rare earth sector is built on a dual leadership model, combining Communist Party committees with traditional corporate governance. These committees ensure that national policy objectives are translated directly into corporate strategy, allowing for swift pivots when priorities shift. The recent commitment by Baogang Group—a major Chinese state-owned enterprise—to lead rare earth base development in Inner Mongolia and Guangxi under the 15th Five-Year Plan (2026-2030) exemplifies this approach.
Inner Mongolia’s Baotou region, for instance, accounts for 60-70% of China’s rare earth separation and processing capacity, primarily focusing on light rare earth elements like cerium and lanthanum. Guangxi, meanwhile, specializes in medium to heavy rare earth elements, which are particularly important for advanced military and technology applications. This regional specialization is by design, not chance, and is coordinated through multi-year planning that synchronizes investment, infrastructure, technology transfer, and environmental compliance across the entire sector.
The impact of this state-driven model is profound. China’s coordinated investment has enabled it to capture 85-90% of global rare earth magnet production capacity, according to Discovery Alert. These magnets are the linchpin of modern defense technology. Rare Earth Exchanges, a Utah-based critical minerals intelligence platform, notes that about 78% of the Pentagon’s weapons programs rely on components that require rare earth magnets. With the U.S. military expected to triple its demand for these magnets by 2030—to around 10,000 tons annually—the stakes have never been higher.
China’s dominance extends beyond production to trade policy. The government integrates rare earth supply decisions with broader economic diplomacy, using export controls, quota systems, and licensing requirements to manage global supply and influence international relationships. The 2010 episode, when China restricted rare earth exports during a diplomatic spat with Japan, remains a cautionary tale for Western policymakers. Today, Beijing’s willingness to use rare earths as a geopolitical lever is more sophisticated, embedding supply access within larger trade agreements and regional economic frameworks.
By contrast, Western countries have struggled to mount an effective response. Market-driven models often face fragmented financing, regulatory hurdles, and a lack of coordinated downstream development. New suppliers find it difficult to break into established supply chains, as downstream manufacturers are hesitant to qualify vendors without a proven track record. This “chicken-and-egg” problem has made it challenging for alternative projects to scale up quickly enough to meet rising demand.
Recognizing these challenges, the new U.S.-Saudi joint venture signals a shift toward more coordinated Western approaches. By pooling resources, technical expertise, and state backing, the partnership aims to create a resilient supply chain that can support both countries’ defense sectors and be marketed to allied nations. MP Materials, for its part, will contribute its rare earth separation know-how and take charge of global sourcing and marketing for the venture.
Still, the road ahead is anything but straightforward. China’s state-enterprise model allows for rapid capacity expansion, technology integration, and supply reliability that market-based systems struggle to match. Its control of the value chain—from mining and processing to the production of finished magnets—gives Beijing multiple points of leverage over global technology and defense sectors. For Western nations, building comparable capabilities will require not only capital investment but also policy coordination, streamlined regulation, and incentives for downstream manufacturers to adopt alternative sources.
As the world races to secure critical minerals for the next generation of technology and defense, the U.S.-Saudi partnership offers a glimpse of how Western nations might respond to China’s dominance. The outcome will likely shape not just the rare earths market, but the balance of technological and military power for years to come.
With global demand for rare earths expected to soar and geopolitical competition intensifying, the success of this new joint venture could set a precedent for future collaborations—and perhaps, finally, loosen China’s iron grip on the world’s critical mineral supply chains.
