Rare Earth Race: Saudi Arabia and the United States Collaborate to Develop the World's Fourth Largest Known Rare Earth Deposit

American Think Tank: Saudi Arabia is Striving to Reclaim Its Glory, but Its Focus Goes Far Beyond Oil

Recent Key Mineral Agreement Between the US and Saudi Arabia Provides a Path for the US to Bypass China's Rare Earth Monopoly.

Although other outcomes of the summit did not meet expectations, the "Strategic Framework for Cooperation on Critical Minerals, Metals, and Uranium" was undoubtedly one of the most significant advancements during Crown Prince Mohammed bin Salman's visit to Washington last week.

The U.S. Department of Defense will fund 49% of the construction of a rare earth mineral processing plant in Saudi Arabia, while the state-owned mining company Ma'aden will hold 51% of the shares. MP Materials currently operates the only rare earth mine and processing plant in the United States, backed by support from the U.S. Department of Defense, which reduces the financial risk for shareholders.

Jabal Sayid in Saudi Arabia has the fourth largest known rare earth deposit in the world. However, many countries have rare earth deposits. For example, an agreement between the United States and Ukraine in February 2022 gradually faded from public attention due to insufficient commercial potential. But this time is different. Saudi Arabia's rare earth reserves are not only large enough but also of high enough concentration to be commercially viable. More importantly, the country has very lenient licensing procedures for mining operations.

MP Materials has been working to improve its extraction processes and attempts to establish a competitor in the United States, but as of the third quarter of 2025, the company has still not turned a profit. Part of this challenge is that even though tariffs have somewhat changed the competitive landscape, the price of rare earth minerals produced in China remains relatively low.

In other words, from the perspective of the United States and MP Materials, part of the reason for facilitating this deal is that Saudi Arabia may provide a more favorable operating environment than its main factory in California. If Crown Prince Mohammed bin Salman (MBS) wants to advance a project, it will not encounter the "Not In My Backyard" (NIMBY) effect or conflicts with local stakeholders, state-level environmental regulatory agencies, etc. This might also make the facility more cost-effective. The lack of political influence of environmentalists in the Kingdom of Saudi Arabia seems to be the main attraction of the project, and it may also make the project easier to succeed.

Impact of the Saudi-US Mineral Agreement

If Saudi Arabia successfully becomes a major rare earth processing center comparable to China, and its output exceeds that of the existing facilities in the United States, it would undoubtedly bring great benefits to the Kingdom of Saudi Arabia.

Although oil is a global commodity, Saudi Arabia still plays a unique role as a location of spare capacity. However, since the shale oil boom in the late 2000s, the export volume of Saudi crude oil has no longer depended as much on the United States as before, leading some American policymakers to believe that the importance of oil to American interests has declined. The successful operation of a key mineral plant could be another crucial interest for the United States, unless the United States itself can develop sufficient domestic capacity. We will closely monitor developments, but the advantages of Saudi Arabia in this area are evident.

This aligns well with the Kingdom of Saudi Arabia's diversified foreign policy. Although this seems to indicate that Saudi Arabia is moving closer to the United States, the agreement still leaves ample space for China. In addition to upstream oil and gas industry services and security sectors (which are dominated by the United States and other Western partners), China's status as a trade partner in Saudi Arabia has already surpassed that of the United States. China also holds a dominant position in renewable energy and is increasingly influential in Saudi Arabia's automotive industry, both as an exporter and as a potential investor in domestic production.

Playing a key role in critical minerals is a win-win for the Kingdom of Saudi Arabia and the United States, helping to reduce dependence on China. Although this could become a chokehold for Saudi Arabia, if the United States relies heavily on Saudi energy, it could ultimately become a key bargaining chip for Riyadh to counter the United States.

Sources: The National Interest

Author: Greg Pridham

Date: November 24

Original: www.toutiao.com/article/1849723478660103/

Statement: This article represents the views of the author.