MP Materials Corp. (MP) is having a pretty spectacular Wednesday, with shares climbing more than 9% after announcing a partnership that brings together American defense interests, Saudi mining expertise, and the global scramble to control rare earth supply chains.

The Deal Structure

MP Materials and the Saudi Arabian Mining Company (better known as Maaden) are teaming up with the U.S. Department of Defense to develop a rare earth refinery in Saudi Arabia. The stated goal? Realign the global rare earth supply chain with U.S. economic and national security interests, which is government-speak for "we'd rather not depend on China for materials critical to everything from fighter jets to smartphones."

The three parties will form a joint venture to build the facility, which will process rare earth feedstock from Saudi Arabia and other global regions. The refinery will produce significant quantities of separated light and heavy rare earth oxides, refined products that will support U.S. and Saudi manufacturing and defense sectors, and be marketed to allied nations.

Here's where it gets interesting from a financial structure perspective: Maaden will hold at least 51% equity in the joint venture, while MP Materials and the Department of Defense will split the remaining 49%. And the kicker? The Pentagon is providing full financing for the U.S. contribution on a non-recourse basis, meaning MP gets strategic upside without shouldering the full financial risk.

What Management Is Saying

"This agreement will be beneficial to MP and our industry, and it further aligns U.S. and Saudi interests," said James Litinsky, CEO of MP Materials. "The formation of the joint venture also underscores MP Materials' role as an American national champion, and it demonstrates how our fully integrated platform can project U.S. industrial capability abroad."

Analyst Action Adds Fuel

As if the partnership news wasn't enough, Goldman Sachs analyst Brian Lee initiated coverage on MP Materials on Wednesday with a Buy rating and a $77 price target, adding momentum to shares that were already rallying hard on the joint venture announcement.

Price Action: MP Materials stock was trading at $63.78, up 9.01% at the time of publication Wednesday.