Saudi Arabian Mining Company (Maaden) has entered into a binding term sheet with a joint venture led by NYSE-listed MP Materials Corp. and the Mountain JV, to explore the establishment of a rare-earth element (REE) refining and separation facility in the Kingdom.

The term sheet outlines "certain advisory and technical services," as well as the "formation of a joint venture (JV) to establish, develop, and construct the REE facility," Maaden said in a statement to the Saudi stock exchange.

NYSE-listed rare earth materials and magnetics producer MP Materials had announced on Wednesday that it has partnered with the U.S. Department of War (DoW) to establish a strategic JV with Maaden to build a rare earth refinery in the Kingdom.

Maaden said in its statement that under the 'advisory agreement,' MP Materials will provide support to the Saudi company in preparing a bankable feasibility study for the Jabal Sayid mine project.

Under the 'technical services' agreement, the US company will assist Maaden with preparing a bankable feasibility study for the REE facility.

The term sheet also provides for a shareholder's agreement between Maaden and the Mountain JV to establish a JV - owned 51 percent by the Saudi company and 49 percent by Mountain JV - to fund, develop, and build the processing facility in Saudi Arabia.

MP Materials will hold an equity interest in Mountain JV, the statement noted.

Maaden will serve as the facility’s operator, the statement said, adding that binding term sheet is valid until 31 March 2027.

MP Materials said in its statement that the JV with Maaden will be designed to process rare earth feedstock sourced from Saudi Arabia and other global regions and produce separated light and heavy rare earth oxides. These products will support U.S. and Saudi manufacturing and defence sectors and be marketed to allied nations.

Full financing for the U.S. contribution to the Saudi JV will be provided non-recourse by the DoW, while MP Materials will contribute its technical expertise and as global sourcing and marketing capabilities, the statement noted. 

MP Materials' joint venture with the DoW will hold the equity position in the Saudi venture with Maaden, it said.

The company disclosed that it is also in discussions to support or collaborate on magnet manufacturing in the Kingdom but didn't elaborate.

(Editing by Anoop Menon) (anoop.menon@lseg.com)

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