Calix Limited. My name is Darren Charles, and I'm the Company Secretary. Today's meeting is being held as a hybrid meeting. We have shareholders in the room here in Sydney, and shareholders participating online in an audio and video format via the Lumi platform. We hope this hybrid format allows as many of our shareholders, proxy holders, and guests to attend the meeting as possible. Shareholders and proxy holders who are attending online have the same ability to ask questions and vote as those attending the meeting in person. To help facilitate the business of the meeting, for each individual item of business, we will invite people in the room to ask questions, before then inviting people online, to ask questions via the Lumi platform. For online attendees, written questions can be submitted at any time during the meeting.
You can also ask questions directly during the business of the meeting when each resolution is being considered. To ask a written question online via Lumi, select the Messaging tab at the top of the platform. Type your question in the box towards the top of the page and click the arrow symbol to send. A copy of the questions you submit, along with any written responses, can be viewed by selecting My Messages. Please note, while you can submit questions from now, they will not be addressed until the relevant time in the meeting. Please also note that your questions may be amalgamated if we receive multiple questions on one topic. Finally, due to time constraints, we may run out of time to answer every single question. If this happens, we will answer these questions via email or by posting responses on our website as soon as possible.
To ask a question verbally using the online system, click Request to Speak in the broadcast window. The audio questions interface will then be displayed. You'll be prompted to confirm your name and enter your question topic. Please submit these details and select Join Queue to be connected. If prompted by a pop-up, select Allow to grant access to your microphone. Voting is being conducted by way of a poll on all items of business. To provide you with enough time to vote, for those joining virtually, polling on the resolutions will open as soon as the meeting commences. Equally, for those in the room, the polling cards handed to you on arrival can be completed at any time during the meeting before the meeting closes. If you are attending online and are eligible to vote at this meeting, a new voting tab will appear as the meeting commences.
Selecting this tab will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options presented. Your vote is automatically recorded, so there is no need to click Submit or Enter button. You are able to change your vote up until the Chair declares voting closed at the end of the meeting. For those in the room, once your voting cards are complete, they will be collected by staff from Boardroom and tabulated with the online votes. The results of the polls will be published on the ASX platform later today. I will now hand over to Peter Turnbull, Chair of the board of directors, for the commencement of the 2023 Calix Limited AGM.
Thank you very much, Darren, and welcome to all here in the room in Sydney, and to all those attending online. It's great to have you with us. My name is Peter Turnbull, the Chair of the Board of Calix, and again, I welcome everyone to 2020 annual meeting of Calix. As Darren has touched on, we continue this year with our hybrid meeting format, and are pleased to have shareholders joining us both here in the room and virtually around the country. As always, our goal is to make the meeting as interactive as possible for shareholders. The Lumi platform will enable you to make comments, ask questions, and vote, whether you are here in person or attending virtually. Welcome, Mark. I'd like to introduce the board and management team attending the meeting here with me today. Helen Fisher, to my right, Non-executive Director.
Alison Deans, next to Helen, non-executive director. Phil Hodgson, Managing Director and CEO. Mark Sceats, Executive Director and Chief Scientist. Good timing, Mark. On my left, Darren Charles, our Company Secretary and Chief Financial Officer. I would also like to welcome Calix's external auditor, Ellie Rothwell, who's here with us today, too. Can I start my address by talking a little bit about the tailwinds that are assisting Calix at the minute? As Akshat Rathi states in the opening to his book, Climate Capitalism, "Economically, it is now cheaper to save the world than destroy it," which is quite an interesting statement. It is estimated that if average temperatures rise by two degrees rather than 1.5 degrees above pre-industrial levels, the global economy could be $100 trillion poorer.
Limiting warming to 1.5 degrees Celsius requires, as most of you would know, reaching zero net emissions globally by 2050, and this is just a mammoth undertaking. This means very deep industrial decarbonization is required. It means green cement, green iron and steel, stable and sustainable supplies of critical minerals.... sustainable transport fuels, and it means removing legacy emissions from the atmosphere directly. The past year has brought into focus the urgency with which the world must act. 2023 marked the hottest Northern Hemisphere summer in recorded history. Extreme heat, fires, storms, and floods ranged from Hawaii and Canada to Europe, North Africa, the Middle East and Asia. What were considered some time back extremes of weather are now becoming the norm. On the investment front, our willingness to invest is apparent.
Despite ongoing inflationary pressures and global conflicts at the minute, more than $35 trillion worth of assets are now aligned with environmental, social, and governance goals. This is a hard number to comprehend. To put that another way, over a third of all invested assets are now ESG compliant. This capital is increasingly working in sync with government policy to drive the massive decarbonization needed across the world. That's a really important point, that the investment capital is working in sync with the various government regimes and the incentive structures around the world. This year in Europe, the Carbon Border Adjustment Mechanism and Net Zero Industry Act were introduced, coupled with the European Emissions Trading Scheme, in which prices reached over 100 EUR per ton of CO2 this year.
These policies promise to provide the economic framework and supporting infrastructure required to decarbonize even the hardest to abate sectors. As many of you would know, in the US, the unusually titled Inflation Reduction Act has turbocharged climate action. A tax incentive of $85 per ton of captured CO2 is reigniting interest in industrial carbon capture solutions. An incentive of $180 a ton per CO2 for direct air capture, in addition to the $1.2 billion direct air capture hubs program, have led to rapid development of new approaches to carbon dioxide removal. Here in Australia, the Safeguard Mechanism has introduced clear decarbonization targets and carbon prices for our biggest industrial emitters. All of this adds up to ever-strengthening geopolitical and macroeconomic tailwinds for decarbonization, and therefore for Calix.
I just move to focus and our focus and strategy. Calix's platform technology has the potential to deliver economically viable and competitive solutions to decarbonize a range of industries, including cement and lime, iron and steel, alumina, lithium, and other critical minerals, as well as more sustainable solutions for water, agriculture, and the battery sector. When you have so many opportunities to develop new products and processes from one core platform technology, you must be disciplined with priorities and discretionary capital. Calix is both. Quite simply, we concentrate on and prioritize the applications and opportunities that we believe will create the best outcome for shareholders over an acceptable time period and with the best use of capital. Our capital-light commercialization strategy, based on licensing, joint ventures, and spin-outs, is providing the focus, flexibility, and speed to support our ambitions and potential.
This model also enables us to minimize any further capital required by Calix at the consolidated level, as opposed to within the various subsidiary businesses being built and scaled up. Flexible funding options for each of the subsidiary businesses aim to accelerate commercialization. They enable investment in a focused and specialist team and the development of application-specific technology. A license agreement with each of our subsidiary companies will continue to deliver royalty income to Calix, regardless of Calix's future shareholding in each relevant entity. Our target at the higher level, our target applications are guided by a number of factors, essentially by a focus on a significant global challenge consistent with our purpose. Secondly, applications that have potential for significant value creation in very large addressable markets. And thirdly, by exploiting the core platform technology to sustainable competitive advantage.
Ultimately, for us, it's about identifying where we can deliver the greatest environmental and shareholder impact. This year, we have continued to focus our efforts on key priority applications and our key projects within them, those being Leilac and Leilac-2. Secondly, green iron and steel, and designing our ZESTY demonstration plant. And thirdly, our joint venture with Pilbara Minerals to produce sustainable lithium right here in Australia. Leilac is, of course, the first example of our capital light licensing strategy in action... A little over two years ago, Carbon Direct Capital Management invested EUR 15 million for a 7% stake in Leilac. Since that investment, Leilac has grown from 8 employees -50 employees across 12 countries, and from 21-76 projects around the world.
It has signed global and perpetual license agreements with Heidelberg Materials and now Heirloom Carbon Technologies, with further agreements currently under negotiation with CEMEX and others. Our significant progress is as a result of investing in a single focus team in Australia and around the world, and they are just getting started. Turning to financial strength, where we are at the minute. Calix's strong balance sheet, revenue, and margin growth are providing the platform required to pursue our commercialization opportunities. In the 2023 financial year, Calix achieved revenue of just slightly under AUD 30 million, with a gross margin of 33%, which were up 42% and 18% respectively from the prior year. Investment in our research, development, and commercialization activity was partially offset by AUD 10.7 million in grants and tax rebates over the period.
We concluded the financial year with essentially no debt and AUD 74.5 million cash on hand, and a clear prioritization of high growth projects. The balance sheet strength that we currently enjoy enables us to grow and to support the enhanced capability needed to deliver our current project commitments. Looking at the 2023 financial year as a whole, following our set, our formal agenda items for the meeting today, we'll turn to Phil Hodgson, who will update us in quite some more detail about our priorities for the year and the 2024 year ahead. But at this stage, I'd like to provide a brief update on our activity during 2023.
Starting with Leilac, as mentioned earlier, Calix's CO2 mitigation business, Leilac, has undergone significant growth in depth, in the depth and breadth of the team, to support our continuing efforts to scale and deploy this technology around the world. The growth is also reflective of the increasing demand for decarbonization solutions, particularly from the cement and lime industry, driven by particular regulatory incentives in Europe and the U.S., which I touched on earlier. The Leilac-2 project remains the primary focus for Leilac. Following a value engineering phase, a lighter and simplified modular unit has now been designed and approved that can be replicated and scaled to a cement plant of any size. The procurement of long-lead items for Leilac-2 is underway, and the commencement of civil works, which was delayed about three months due to permitting issues, has now commenced.
Commissioning and testing is expected to start in March 2025. Key commercialization milestones for Leilac included a global license agreement with Heidelberg Materials, as I mentioned, and most recently, another global license agreement with direct air capture company Heirloom. The partnership with Heirloom aims to integrate Leilac's electric kiln technology for lime calcination into Heirloom's lime-based direct air capture process for the removal of atmospheric CO2. Leilac's goal is to capture 1 billion tons of CO2 from the atmosphere by 2035, and they have achieved significant momentum towards that goal and quite some success to date. Since signing the MoU in February 2023, Leilac and Heirloom have conducted successful research, development, and engineering programs that are now informing the design of the new commercial direct air capture facilities.
Projects with Heirloom will also accelerate the scale-up and the electrification of the core technology for other applications, which will include cement, iron and steel, lithium, and other critical minerals. The second priority I touched on earlier is ZESTY, the Zero Emission Steel Technology. Australia supplies over half the world's iron ore, contributing over AUD 150 billion to our national export earnings. All of these exports are in the form of hematite, an ore type that is not currently compatible with other HDRI technologies being developed. With iron and steel contributing around 7% of global emissions, enabling the decarbonization of iron ore processing across a range of ore types is imperative for global climate and development goals, and also of national significance, national importance here.
With the support of the Australian government's Australian Renewable Energy Agency, which you probably know as ARENA, we have progressed testing and the design work for a renewably powered direct hydrogen-reduced iron, or H-DRI, demonstration plant. Initial pilot scale testing showed excellent metallization of a range of ore types with ZESTY. Importantly, this includes hematite ores from the Pilbara region. A front-end engineering design study for a 30,000 ton a year range by plant for a range of iron ore types was. Initial pilot scale testing showed an excellent metallization of a range of iron ore types with ZESTY. Importantly, as I said, this includes the hematite ores from the Pilbara.
A front-end engineering and design study for 30,000 ton per annum plant, for the ZESTY iron plant, as well as a significantly expanded ore testing program, is expected to be completed by the end of the calendar year. Turning to lithium, as you probably know, in November 2022, we executed a joint venture with Pilbara Minerals to develop a novel midstream lithium processing technology to provide low carbon, low waste, and high value lithium salt. The joint venture has made significant progress, culminating in the proposed midstream demonstration plant passing its FID decision point in August this year. The demonstration plant is designed to produce around 27,000 tons per year of spodumene contract, concentrate fines to produce over 3,000 tons a year of lithium phosphate.
This process could increase lithium concentration in the product from around 5-6% to 35%. Its aim is to reduce waste from 94% to 0%, and it hoped it will also reduce emissions by 80%-90% relative to conventional processing, as is done today in rotary kilns. The process also aims to demonstrate the expected lower capital and operating costs of electric calcining, as well as the potential to rationalize supply chains by processing minerals at the mine site itself.
This is a AUD 105 million project, which is supported by AUD 20 million grant from the Australian government, AUD 67.4 million from Pilbara Minerals, with Calix contributing AUD 17.6 million and receiving a 24% carried equity interest as recognition of the contribution of our core technology. Successful demonstration of the midstream process is intended to provide a pathway to its commercialization for the global spodumene processing industry. Turning to magnesia, as some of you would know, this year we combined the water and biotech businesses into a single new magnesia line of business. This was designed to increase the scale and reach of Calix's magnesium-based products. The magnesia business will focus on delivering revenue growth for the group through increased sales of water treatment products in the US and Asia.
In addition, it will develop and commercialize applications for agriculture, marine, and antimicrobial resistance, as well as develop sustainable processing of magnesium metal. In the U.S., new water product development helped to secure new business within existing hydration plant regions in the Pacific Northwest and upper northwest of the United States. Revenue growth in our U.S. business was 14.2%, coupled with strong margins, which led to a gross profit increase of 28.6%. Revenue growth accelerated during the year, with growth in the second half of financial year 2023, up 28% compared with the same period in financial year 2022. Significant progress was also made in building the two new hydration plants in Ripon, Wisconsin, and Lufkin, Texas, with the Lufkin plant now online and the Ripon facility expected to commence operations by the end of this year.
We believe that these two new plants will support a significant growth in this line of business in the region. Turning to research and development. In collaboration with our network of research centers and industry partners, Calix continues to develop and explore and develop further applications of its core platform technology. Our high surface area magnesium oxide materials with enhanced bioactivity offer multiple, safe, and sustainable environmental and health solutions. Trials continue for novel applications in agriculture, marine coatings, and antimicrobial resistance. In relation to batteries, commercial type commercial prototype level lithium manganese oxide battery cells targeted high power applications have been successfully produced. Calix also expanded its product battery production capability to new chemistries favored by the electric vehicle segment of the battery market, demonstrating potential for a renewably powered and low-cost, chemistry-agnostic platform technology to produce cathode materials.
Turning now to sustainability. Calix endeavors to help solve critical global environmental challenges, but we're also making progress towards greater sustainability in our own operations. We're not exempt from making the changes that everyone around the world is also trying to make. We have again reaffirmed our commitment to the United Nations Global Compact , the world's largest sustainability initiative, of which we have been a participant since 2020. We've also completed our inaugural greenhouse gas assessment, which has provided an accurate and transparent foundation on which Calix is developing an emissions reduction roadmap for our own operations and supply chain in financial year 2024. Complemented by various initiatives to foster health, wellbeing, diversity, and inclusion, the safety and wellbeing of our employees continues to be our primary operational focus.
Each and every injury, incident, investigation outcome, and near miss is reported to the board, demonstrating a strong safety reporting culture, as we, of course, work to prevent reoccurrence and improve safety in general. We continue to foster a forward-looking preventative culture, and very much seek to learn from any incidents and safety-related events that do occur. It's an environment of continuous improvement. Turning to people and culture, Calix has a dynamic workforce now spread across many countries, and we obviously understand that our people drive our performance. We foster a culture of innovation and diversity of thinking. We also seek to provide ongoing personal and career development opportunities, as well as a framework of close communication and listening to and with our workforce.
Our recent culture survey, conducted by external and admin independent consultants, showed strong engagement from a very passionate and caring team, as well as identifying areas where we can enhance our employee experience and the way in which we work and collaborate with each other. As we continue to grow, we will remain focused on building a collaborative, diverse, and supportive culture across the whole team around the world, and that's one of the highest priorities for Phil at this stage. Turning to governance, in the 2023 financial year, the board established a new sustainability committee. In addition to updating the board charter and code of conduct, we also replaced the Remuneration and Nominations Committee with a new People and Culture Committee and charter, and updated charters for the Audit and Risk Management Committee and Technology Committee.
Over the last few years, the board has also continued to maintain a very proactive approach to board succession and renewal. Our goal, of course, is to ensure the size and composition of the board is appropriate to support the continued delivery of Calix's growth strategies, as well as being positioned to meet prevailing best practice governance standards. As part of this process, in February 2023, we were very pleased to announce the appointment of Alison Deans as a non-executive director, and the retirement of non-executive director, Dr. Jack Hamilton, from the Calix board of directors. Alison's appointment, in addition to further renewal planned, has strengthened the collective skills and the overall experience of the Calix board.
On behalf of the board of directors and the whole Calix team, I would like to express my sincere gratitude to Jack Hamilton, who is with us here today, for his substantial and valuable contribution to Calix over many years. His commitment and wise counsel have provided considerable benefit to the group, again, over an extended period, and we wish Jack you all the very best for the future. Our process of board renewal and succession continues, and I'm pleased to announce the proposed appointment today of Dr. Sarah Ryan, who is with us online today. Dr. Ryan will join the board on 1 January next year. Dr. Ryan will bring to Calix extensive global experience from across the energy, mining, and investment sectors, including a deep understanding of heavy industry, complex project management, technology commercialization, and company scale-up processes. Dr.
Ryan's deep technical experience and breadth of executive and board experience includes helping to build organizations across a range of sectors, including energy, natural resources, and infrastructure, with a particular emphasis on innovation and technology-enabled solutions. Dr. Ryan is currently a non-executive director of Viva Energy Group, Aurizon Holdings Limited, Transurban Group, and the Future Battery Industries Cooperative Research Centre . Until recently, Dr. Ryan was a non-executive director of OZ Minerals and Woodside Energy. Dr. Ryan holds a Bachelor of Science in Geology from the University of Melbourne, a Bachelor of Science First Class Honors in Geophysics from the University of Adelaide, and a PhD in petroleum geology and geophysics from the University of Adelaide, and is also a fellow of the Academy of Technological Sciences and Engineering.
I would also like to let you know that this will be my last Calix AGM, as I propose to retire from the board in the first half of calendar year 2024. It has been both an honor and a privilege to serve Calix over the years, and to work with such a great team of people here in Australia and around the world. I have absolutely no doubt that the period ahead is going to be very exciting for Calix. After my retirement, the Calix board will be in excellent hands, with Alison Deans set to take over the role of chair. Alison's company building, commercial, governance, and technology-related skills are very well matched to Calix's current and future needs.
I know the board will be very well positioned in the future to work with the whole team to meet our strategic goals in a risk managed and well-governed way. So on behalf of the board of directors, I would like to conclude. No, well, I'll come back to that at the end, actually. Darren, I think we'll commence the formal resolution process at this stage. Is there anything you need to say? Any reminders about voting?
No, I think we're good to go.
Okay. So in terms of where we are with proxy, the proxy situation overall, I can advise that we've had 182 valid proxy forms, which were received by the relevant cutoff date, totaling 74.8 million shares, being equal to about 41.3% of the shares on issue. There were no invalid proxy forms received, nor were there any proxies lodged by security holders with a nil balance. As has been our proxy structure in the past, each resolution will be determined on a poll. So the first item of business is the financial report. This is to consider the financial report and the reports of the directors and auditors for the year ended 30 June 2023.
There is no vote as such on this item, and I note that Calix did not receive any questions prior to this meeting on the accounts for the auditors or management. But that doesn't preclude any questions obviously being raised today. So on that note, are there any questions in the room first up, before we turn to online questions? Nothing in the room. Anything online, Darren?
There are no questions online, Peter.
Okay. Well, as I mentioned, there's no vote on the report, so they're essentially just tabled for the meeting. The first of the substantive resolutions, we can move to resolution one now, which was the normal remuneration report. Which is to consider, and if thought fit, to pass the following resolution as an ordinary resolution: That the remuneration report of the company for the financial year ended 30 June 2023, which forms part of the directors' report, be adopted. As most of you would know, this is an advisory resolution and doesn't bind the company as such. But if you get a significant vote against the remuneration report, there is always something to take notice of. No-
Just ask one question.
Mm.
What is exclusion mean?
So there are certain shareholders who are unable to vote on that resolution.
Oh.
Namely, the board of directors.
... Exclusion.
They can't vote.
Yeah, I was just actually coming to... Each director has a personal interest in their own remuneration, as described in the REM report. The board unanimously recommends adoption of the remuneration report, but when we interested persons vote, the share registry takes our votes out of the report where we must be excluded, i.e., this one.
Understandable. But the problem is this.
Yeah. I should just note, as chair of the meeting, I intend to vote. Some proxies come in undirected, and I intend to vote those proxies in favor of the resolution. And as we mentioned, this voting this particular resolution is subject to the exclusions we just talked about. The proxy votes, I think, are up on the screen, Darren, for this particular resolution. So can I just turn to the room and ask if there's any particular questions or comments on the remuneration report? Yes.
It's not sitting beyond the remuneration report, but to say to the people that may be doing mental gymnastics in future, could you include the percentages for and against the-
Yeah, good idea. Yeah, we will do that. Sure.
Thank you.
Any other questions in the room? Other online cohort?
Yeah. There are no online questions, Peter.
Okay. Well, can I ask you now to vote, as Darren described earlier, on the poll? We'll turn to resolution two. This is the re-election of Helen Fisher, who's been with us for a number of years and comes up under the constitution for re-election. The precise resolution is to consider, and if thought fit, to pass the following resolution as an ordinary resolution. That Helen Fisher, who retires under the company's constitution, and being eligible, offers herself for re-election, that she be re-elected as a director. The board is unanimously behind this recommendation, and again, as chair of the meeting, I intend to vote on any undirected proxies in favor of the resolution. So let's just check if there's any questions on this resolution from here in the room in Sydney. Nope?
There are no questions online, but Helen-
Yeah, and I'll just turn to Helen now to... You might like to say a few words about your re-election.
Thanks, Peter. So to the Chair and my fellow directors and shareholders, ladies and gentlemen, good morning. I appreciate the opportunity to talk to you at this annual general meeting. It has been my pleasure and privilege to serve you over the three years that I've been a non-executive director with Calix. And during this time, I also have been the chair of the Audit and Risk Management Committee. And obviously, as Peter said, being eligible, I stand for re-election. Calix is a company that can change lives. It has the potential for exceptional global environmental impact and value creation, both for shareholders and society more broadly. I'm deeply passionate about what Calix does and the positive impact, its unique platform technology and purpose-driven team can have in solving global environmental challenges.
I'm confident that my strong financial, taxation, and strategy skills, and professional services and investment experience can continue to support Calix in achieving its full potential. Building upon my undergraduate degrees in science and law, and master's degrees in law and commerce, I spent 11 years as a partner at Deloitte, and for more than 5 years led Deloitte Australia's National Life Sciences practice. Since leaving Deloitte, I have founded a global life sciences fund called Bio Capital Impact Fund , investing in what matters for life, where I'm the CEO and managing director. In this role, I have built extensive global networks in the industry and developed strategic partnerships with various industry players. I'm also an experienced non-executive director in listed companies.
I serve in addition to Calix, I serve as Chair of the Audit and Risk Management Committee and a non-executive director for Paradigm Biopharmaceuticals Limited, an ASX-listed late-stage clinical company developing an osteoarthritis drug. I have previously served in similar roles at Sienna Cancer Diagnostics and Bard Life Sciences Limited. In my role as a non-executive director, I have been involved in numerous acquisitions, licensing transactions, various capital raisings, and one, a non-market merger of two publicly listed companies. If re-elected today, I will continue to use all my skills and experience to contribute to Calix's ongoing success. I will continue to chair the Audit and Risk Management Committee effectively, to safeguard shareholder value and the financial performance of Calix. Ultimately, I will work to help ensure Calix achieves its full purpose and mission, because, as we know, Mars is for quitters . Thank you.
Very good. Can I ask everyone to then just move to vote on this particular resolution, please, in the way that's been described earlier? Thank you, Helen.
No. No questions.
All right. Well, let's move to resolution 3, which is the election of Alison Deans, who joined us, as I mentioned earlier, earlier in 2023. The resolution itself is to consider, and if thought fit, to pass the following resolution as an ordinary resolution. That Alison Deans, who retires after having been appointed by the directors as a director to fill a casual vacancy under Clause 13.10 of the company's constitution, and being eligible, stands for re-election, that she be re-elected as a director of the company. Again, the board unanimously recommends this resolution to shareholders, and as chair of the meeting, I again intend to vote undirected proxies in favor of the resolution. So before turning to Alison, are there any questions within the room here on this resolution? No.
There are no questions online, Peter.
Okay. May I turn to you, Alison, if you wouldn't mind, to say a few words, please?
Thank you, Peter. Ladies and gentlemen, good morning, and thank you for the opportunity to talk with you today. It would be a privilege to serve you, the shareholders of Calix, as a board member. As you all know, and as Peter has so well described this morning, Calix is an exceptional company with a rare opportunity to contribute to one of the most important challenges of our time: decarbonizing the planet. The Calix technology has the potential to be competitive across several industries and leverages a smart capital-light business model. It's this opportunity and mission that has attracted a highly skilled, motivated, and aligned team.... These three themes of purpose, technology, and people have been the threads through my career, which has focused on helping to build high-growth companies that are tech-enabled, people-driven, and fueled by an alignment of purpose and shareholder value.
I've spent 30 years in high-growth tech organizations as a consultant with McKinsey and Company, as a CEO of eBay Australia, and as a board member and advisor to many tech companies, and as the CEO of two venture capital funds. I'm currently the Chair of Cochlear and a director of Ramsay Health Care, and deputy. I'm also a venture partner with Main Sequence Ventures, which invests in deep tech companies, where founders are using technology to address major global challenges, such as feeding 6 billion people, humanity-scale healthcare, and, of course, decarbonizing the planet. If elected today, I'd endeavor to use my experience from all these environments to deliver long-term value to shareholders and also to society. I look forward to serving the company and helping to realize the potential of Calix. Thank you for your time today.
Excellent. Thank you, Alison. If there's no more questions, can I just ask you to vote in the normal manner on resolution three, please? We'll turn then to resolution four, which is the appointment of a new auditor.
A bit wordy, this one: To consider and, if thought fit, to pass the following resolution as an ordinary resolution, that in accordance with Section 327B of the Corporations Act, and for all other purposes, KPMG having been nominated by a shareholder and consented in writing to act as the auditor of the company, be appointed as auditor of the company in accordance with the Corporations Act, with effect from the later of: A, the conclusion of the AGM, or B, the day on which ASIC gives its consent to the resignation of the current auditor of the company, and the board be authorized to agree to KPMG's remuneration in connection with the appointment. Again, the board is unanimously supporting this recommendation, and again, undirected proxies will be voted in favor of the resolution.
May I check again at this stage, whether there's any questions here in Sydney on the proposed change of auditor? No?
There are no questions online, Peter.
Okay. Again, at this point, can I ask you to formally vote on, resolution four, which relates to a change of, audit service provider. I do just want to, at this point, BDO has been our audit firm for a long, long time. We went through a full external independent tender to get to this point. That's taken us to a change of auditor. But I do want to just publicly thank BDO. It's been a tremendous and valuable relationship over a long period, which is now going to change, but I'm sure we will keep in touch with BDO in many senses, and we very much look forward to working with, our new audit firm, KPMG. Anything I've missed, Darren?
No, nothing.
I'll just check at this. Yes. Yeah.
Curious question, what's the reason for the change of audit?
Look, a range of issues, I guess. Time has played a role. It's been a long, long time. What? 12?
2011.
Yeah, 12, 12 years.
Yeah.
It's healthy to have a change over time. We have had a change within that of various audit partners, but, you know, it's the same firm, and, you know, I think, our needs have changed a little bit. So there's a number of factors that sort of led to it. Not that it was an easy decision. BDO were on the. We had a small final list of three or four firms, and it was quite a close-run thing at the end of the day, so. But we, as a board, determined that it was a good time for us to make a change.
Thank you.
Anything I missed, Darren?
No.
Okay. Just check once again, any other questions from here in the room in Sydney or online?
There's no questions online.
Okay. All right. Can I just make a few concluding remarks? On behalf of the board of directors, I would like to conclude by thanking all of Calix's customers and partners for their continued commitment and collaboration as we work together to help solve global challenges. I would also like to thank my board and senior management colleagues, Helen Fisher, Alison Deans, Phil Hodgson, Mark Sceats, and Darren Charles, for their dedication to the goals which Calix has set for itself. Our ambitions are considerable, as you know, driven by the potential we see in the core platform technology and the scale and urgency of the problems we hope to address. We continue to prioritize our efforts on the key applications that we believe will deliver the greatest impact and put Calix on a path to realizing its full potential....
Our rapid progress over the past few years is a result of our talented and purpose-driven team, and the board sincerely thanks all of Calix's employees and our contractors and consultants for their tireless efforts. Finally, on behalf of the Calix board, management, team, and all the staff, we would like to thank each and every one of our Calix shareholders for your ongoing and very much valued support. Thank you. Now, I'll turn to Phil to
Mm-hmm.
Give us what's going to be, I think, quite an interesting rundown on where we're headed into financial year 2024.
Excellent. Thank you, thank you very much, Peter, and before I launch into it all, of course, outstanding. You know, what I've learned from Peter, he challenges me, he supports me when needed. And it's been really a very fruitful relationship with. I think our first capital raise, we were AUD 7 million valuation, pre-money. And so the journey we've taken in the last 10 years has been outstanding. And, I couldn't-
We had a lot of tougher issues in 2013, too.
We've had some very interesting issues. And so I've really valued, Peter-
Thank you.
Our relationship, and we wish you all the very best on behalf of the board.
Thank you.
I know I've got a few months to work with you, so I'm kidding. It's all nice. I'm not saying anything.
Anything can happen in the next little while.
Absolutely. And, of course, you know, Alison, looking forward to working with you from January first in your new role. And I'm sure it's gonna be every bit as entertaining, every bit as fun, every bit as challenging, and every bit as successful as the time I've enjoyed with Peter.
I should just say to you, Phil, I, it was remiss of me. I, I think the proxy votes are reasonably clear, so congratulations to both of you.
Well done.
Did you wanna have the cards released?
Yes.
As those ones. I think we'll collect them at the end.
Mm-hmm. Yep.
Of course, they have been. Thank you.
Absolutely.
Thank you very much.
Excellent! Okay, well, welcome everyone. Formal part of the meeting over, so, I'll take you through a little bit about what's in my head about the business. What, what we've achieved, Peter's covered off really well. But looking forward, and where do I see the opportunities? What, what we've done to date, so far this year, it's a very fast-moving world, and we, we're a very fast-moving company. And so in that, I very much welcome, questions. I'll try. I'll repeat them as, the microphone needs to pick up for those online. But I want this to be an interactive session, so as things arise, yeah, put your hand up, ask a question. I'll jump through the. Well, you've all read that, I'm sure, so I'll get going. And Peter's covered about Calix.
I mean, it's quite a remarkable journey, as we've said before. Founded in 2005. One of the co-founders here with us today, our Chief Scientist, Mark Sceats. And it's an even longer journey for you, Mark, than it has been for me, but quite a remarkable journey. A lot of the cleverness, a lot of the inventiveness, the patents, the intellectual property, all coming from that man over there. And the team we're building around Mark, highly impressive. And as shareholders, if you ever get a chance to go down to Bacchus Marsh, just 40 minutes out of Melbourne, let us know. We'll take you to meet some of the people who are doing this amazing work.
But Mark, yeah, a lot of this before Peter, at my time even, sprung out of your head and continues to. So very... It's excellent to have you here as well.
Thank you.
Okay, so, some of you may be wondering, I know a lot of you have been with the journey for us for a little while at Calix, but some of you may be new shareholders. And, what is this technology, that this Australian homegrown technology that we're taking to the world, that could address global challenges? Well, there's a lovely diagram there, and there's sort of industrial, sort of picture and all that sort of stuff. But in the end, it all comes down to how I explain the technology with my toilet roll. This. I'm just back from overseas. I was nine weeks overseas, so this has got a bit crushed, but I'll sort of move it out a bit.
So this, the core technology is a new way to heat stuff up, and how I usually describe it is a tube. We do make them bigger than this. The biggest one we've made is 1.8 meters in diameter, over 30 meters high. So quite a significant scale. And we heat this tube to over 1,000 degrees centigrade. And so it's glowing red hot, and whatever we heat goes down the tube. It needs to be a small particle size, like dust or flour. And so when you drop that, it just floats down through the tube, and it's the red-hot walls of the tube radiating heat into those particles that does the heating up.
So as opposed to a normal kiln, when you shove your rocks and your fuel, you light a match, and, you know, Romans been doing it since, you know, 100,000 BC. We don't heat directly, we heat indirectly. Why do it this way? So here's where my second prop comes in. This is my traveling rock. I usually have a bigger one, 'cause it's more impressive, but this is a lump of limestone. About half the weight of this is CO2, trapped in the rock. So if you can remember your chemistry days, limestone is calcium carbonate. So the carbonate bit, when you heat up the limestone, that ejects CO2. And so the cement lime industries need this to make cement and lime.
What they do is they heat this up and release that CO2, and you're left with what's called calcium oxide, which is lime. That's the basis of cement clinker. The cement lime industries are responsible for 8% of global CO2 emissions, and over half of those emissions is coming from this. So whatever they do to have electric kilns, use renewable energy, et cetera, they've still got over half their emissions coming from this. So if you think about our technology, which is just a different type of kiln, then as this is descending down our tube, in small particle form, floating down and being heated up, those little particles are releasing CO2, but in our kiln, that's not released to the atmosphere. It's not mixed with other furnace gases.
It's trapped inside the tube, makes its way out the top as a pretty pure stream. And so the core technology there represents a way for just a different way to heat stuff up that can directly separate the CO2 coming out of this. The other thing about our core technology is we don't mind how we heat this tube. We can heat it with fossil fuels, we can heat it with waste, we can heat it with biomass, we can heat it with electrons. So imagine your toaster in the morning when you're cooking your toast. Imagine having sort of elements around the outside of the tube, heating the tube. So not only can we capture the CO2 that is coming out of this, this kiln is ready to be electrified. Okay? Ready for renewable energy. So that's cement and lime.
I don't carry three rocks in my pocket. My second rock, imagine this is brown, iron ore. With iron ore, what you're doing with iron ore is trying to make iron and ultimately steel. Iron ore is rust, iron oxide, and what you do in a blast furnace is basically you're burning that iron ore with carbon, not only to make heat, but the carbon sucks the oxygen off the iron ore to make iron, okay? And that's how 80% of the world's steel is made today. So imagine this is iron ore. Imagine this is iron ore fines. Millions of tons of those produced every year. And what I mean by fines, small particles. Our people love small particles. Currently, that stuff is waste. It's too small to go in a conventional blast furnace, too small to be economic to pelletize.
And so with iron ore fines, waste, if you put that down our tube and up the tube, you put hydrogen. And if you made the hydrogen from renewable electrons, that's called green hydrogen, and that green hydrogen loves oxygen. It'll suck the oxygen off the iron ore to make iron. And so here's a way to use hydrogen to turn iron ore into iron. And when we talk, think about the some of the stats that Peter talked about in his speech, not only are we producing half the world's iron ore here in Australia, but we're just shipping it offshore as it is. 44% of our export earnings is iron ore. 96% of those are unsuitable to go into what's called electric arc furnaces.
So the ability to renewably make iron and steel for Australia, in terms of its impact upon Australian ore, is profound. We are at risk of losing half our income as a country. Pretty important stuff. My last rock, imagine this is sort of greeny blue. There's about five rocks I could talk about, but I only do three at the top of the speech. Greeny blue, spodumene. Over half the world's lithium currently comes from spodumene, so all the electric vehicles being produced, et cetera, over half those lithium ions are coming from Australia, from a rock called spodumene, which is this sort of greeny, the greeny bluey bits are the bits higher in lithium. And so spodumene is currently mined and shipped offshore.
There's a bit of concentration, but as Peter said in his speech, 6% is lithium oxide in what's shipped offshore, and the rest is waste. 94% of what we ship offshore is waste, and so that is just makes it hard to handle for, of course, the end customer. Of course, all the carbon used to move that stuff around as well is difficult. Not only that, what does it do at the other end? It goes into a kiln, and some of the fine stuff gets blown out, some of the fine stuff gets melted, and you can't get lithium out of it. There's even more waste. With our kiln, we love small particles. A lot of these small particles are produced in concentrating up the lithium or the spodumene that's sent overseas.
That particle is a perfect size for our kiln. And not only that, if we can locate this kiln at the mine site and power it with renewable energy, then all of that other waste, if you're producing, putting those fines through here, extracting the lithium salt on a mine site, all that other waste that you would have shipped offshore can be used at the mine site for rehabilitation. So you're not moving stuff away from the mine site where you've just mined it. So again, when we look at the statistics that Peter talked about before, about how much savings this can make in terms of carbon and also waste, dealing with waste, and also adding value here in Australia using renewable energy, it sort of makes sense, and that's the project we're developing with Pilbara Minerals. So that's the core technology. There's three applications.
I'll put my little tube down there and move through. Any questions on the core tech? I always want to make sure people are... Yes.
Just a question on the ZESTY. You're only at the moment focused on taking fines and putting them in. You're not actually having discussions around crushing ore to get into the fines?
Yeah, so-
So the bulk will still go through the normal supply chain at the moment, because picking up fines adds an additional,
... Yeah. So, the question concerned specifically we're targeting the iron ore fines. And, yes, we're not necessarily targeting, let me say targeting, taking what is normally exported as lump and crushing it down further. Why? There's already millions of tons of fines to deal with. If this adds sufficient value in Australia, and of course, as there's pressures coming onto Australia to make green iron here, there's no issue with adding a crushing circuit at the front end to take lump and convert it to fines, eventually. But the market is already very substantial just for waste fines at the moment. Yeah. Okay, just in terms of our achievements in 2023, again, Peter covered these off.
I'll pick one little item out of this one, just to emphasize how important it was: the license agreement with Heidelberg in November. The business model that we talked about, where Calix remains capital light and generates income from licenses and royalty fees. And as these businesses that we're developing mature and start to commercialize and also start to go past a significant value inflection point, we'll look and see whether it's worth spinning these businesses out. We've done that already with the Leilac group, and we will own 30% of the license revenue of that group, regardless of how much we own of it. So we could sell that down even more. But the key thing is we continue to own 30% of the license fees that that group generates.
Now, the question always came to us: Is a license business model gonna work in the cement industry, which has never paid a license fee? All of the equipment in a cement plant today is paid for as equipment. And so what was important about that deal that we did is it proved for the first time with a cement major that we can put a license agreement in place that underpins this business model that we've been trying to achieve. And of course, since this announcement in November last year, we've recently announced another license agreement, and that was for a different application. That was for still the Leilac piece, but for direct air capture. But again, that's a license arrangement that is underpinning the business model that we've been talking about for some time.
So very, very important deal for us, that was completed then. And of course, the Pilbara Minerals deal progressing past final investment decision, in August, so just past FY 2023, was a critical move for us. We formalized that joint venture during FY 2023, and then moved past the final investment decision for that facility, to move ahead in August this year. So we talked about the financial position. We've got a very strong balance sheet. Raised capital in November last year to really take us through to completion of the Pilbara Minerals project and the commencement of pretty transformative revenues, that will ultimately come from that project, as it ramps up.
So if I concentrate the rest of this talk on what we're doing here, where we're focusing on decarbonization, because that is really, I guess, the theme of the day. And there's a lot of things we're doing in a few different areas. We talked a little bit about batteries and biotech before, and there's, in a sense, they're decarbonization activities as well. Low energy routes and much more environmentally friendly routes for production of some pretty interesting materials. But what's really, I guess, driving me inbound into our business, and when I mean inbound, it's not just casual interest or... I mean corporates contacting us to find out how they can decarbonize their businesses. That is really governing the activity in the company today.
It's really governing most of the activity. So what are we focusing on? We talked a bit about cement and lime. Key activities with Peter, as Peter mentioned, site works have commenced on our Leilac facility. Leilac-2 facility, I should say. Four of these. So the original Leilac facility was one of these. 25,000 tons per annum capacity, CO2 separation, for one tube, is what our sort of nameplate is. And by the way, the Leilac-1 facility, which we completed in 2019, is still the largest CO2 separation facility on a cement plant outside of China. And the one in China is using a chemical system, which is quite energy inefficient, and that's about 50,000 tons.
So, we're about 25,000 tons, still the largest one today outside of China on a cement plant. So we're going to four of those in the Leilac-2 facility, and as we said, site works have commenced. We had a bit of a delay of three months while some bats needed to be moved out of a rather large concrete tower that needed to be demolished to make way for our tower. I don't think anyone saw the bats, they just saw some, well, remains of where bats had been. I wouldn't say this is. So under the German permitting system, we couldn't touch that building until late September. But that building's now been demolished, so anyway, we're underway, which is great. Long lead items procured. Yeah, really great to see that underway.
The Leilac-1 tower, once we got access to site to build the Leilac-1 tower, we erected it in 14 months. So yeah, we've the race is on. We want to get this done as quick as possible, and at last, we're creating the space to get that work underway. Green iron and steel, interesting here. We wanted, at this stage, to have finished our second campaign on different iron ores. We've decided to expand that campaign, so we're gonna run that through to the end of this year, calendar year. Because of the inbound, we've got quite a few more ores that we are testing now from just about every major iron ore producer in Australia.
And so we're not gonna be publishing interim results 'cause the iron ore producers are very sensitive about their ore provenance. So we're gonna publish it all together in the one with obviously, ore A, B, C, D, E, F, G, et cetera, so no one can tell whose is what. But each will get their own individual results. But that program is gonna run to the end of the year, so I'm really looking forward to talking about that at our half year results presentation, which usually is towards the end of February. But suffice to say, I am very pleased with the progress being made on that iron ore testing, so that's what I'll say on that. Critical minerals, as we said. Oh, question, yes.
Just on the subject of the lime last year, so Adelaide Brighton, are they still involved with all the action?
Yes. So, we're still continuing to work with Adelaide Brighton on. There's a couple of projects that could be prospective there. No doubt, you're aware that November last year, the government canceled the CCUS program, or the Carbon Capture Utilization Storages program, with funding for those particular projects. The government did, however, announce a new series of funding rounds. And so, and it's not just carbon capture. The technology and the work with Adbri fits into several different categories. We're still waiting for full details of what those funding rounds are gonna look like. So, watch this space. So the work with Adbri does continue, albeit slowly. And, I'll talk a little bit about a green methanol project in South Australia that could be prospective for the lime calcination with Adbri.
Okay, and lastly, direct air capture. I'll talk a little bit about direct air capture as well, which is another lime application, by the way, and I'll explain a little bit how that works. So just in terms of moving through the presentation, as I say, the decarbonization bit is the bit consuming 80%-90% of the activity in the company, based upon inbounds. It's based upon what we're, the questions we're being asked, interest in the technology from those in the industry. One here that perhaps is gonna start emerging over the course of this year, and it's in our KPIs to get the basis of design together for alumina.
I won't talk too much about alumina today, but it's really interesting that the technology that we've got here could be applied to alumina as well. So alumina is, well, tiny compared to iron and steel. It's only about a tenth the size, you know, just a few 100 million tons a year. But still a significant opportunity for the technology in decarbonization, decarbonizing aluminum production. And again, 50% of our aluminum gets exported to Europe, and as Peter mentioned, the Carbon Border Adjustment Mechanism is starting to kick in in Europe. So carbon will be a tariff in imports into Europe, and aluminum is one of those metals or exports from Australia that will be caught.
So you've seen the aluminum industry start to really make noises here and make some effort here. So one to watch. Just quickly on Leilac. I think I've talked about the scale-up. I've talked a bit about where Leilac-2's getting to. It's the civil works site works have commenced, which is great. It's a four-tube version. Leilac-3 is ultimately where we're going, and Leilac-3 is really just taking several Leilac-2 modules and bolting them together. And so a full-scale Leilac-3 facility, you can see sort of the diagram there, what it looks like on a cement plant. Not a huge footprint. It's sitting there next to what it would replace.
So on the very right-hand picture here, what's called the preheater tower in the cement plant is what it would ultimately replace. So not a huge difference in the footprint. The pipeline, again, Peter mentioned, up to 76 projects in the pipeline, sort of moving up quite rapidly over the last 3 years. We're not targeting to double the pipeline this year. What we're targeting this year is to move projects down the pipeline. We've got most major cement companies in this pipeline now. We've talked about a few where we can. We're under confidentiality for quite a few others that we can't. But our target is to move projects down this pipeline this year. And also... Oh, yes, question.
Do you need Leilac-2 proof points to start other projects, or can you actually start some Leilac-2s or 3s or 4s?
Yep. So, the question was, do we need the Leilac-2 to start these projects? In cement, these other cement projects, for example, there's several that would like to be around their final investment decision point as Leilac-2 comes up and hits its operational proof points. So that's what we call the final investment decision on those plants. But to be at a final investment decision on those plants, the work starts today. And exactly right. And so some of these numbers, and you can see some moving down this pipeline from initial scoping to basis of design and these sorts of things. But that work has to start today for those plants that really would want to come on. So yes, Leilac-2 is important because it ticks that proof point.
Yeah, Leilac-1 is 40 years for direct air capture opportunities.
Yeah. So if we're talking just about a one tube module, yes, that'll be the first plant that we'll build for direct air capture, and then expand similarly to Leilac twos and then threes. Yep. The other thing to remember is that two-thirds of this pipeline is cement, but about a third is lime, and Leilac-1 is already a small lime facility. Cement and lime, what, what's the difference between the two? They're both basically using limestone to make an end product. But lime is a really important input into iron and steel, aluminum, pulp and paper, glass production. It's a very important industrial chemical. It's about a tenth the size of the cement industry. Again, only 400 million tons a year of the stuff.
So, still quite a large opportunity, but about one-third of this project slate is lime.
The Leilac-2, I take it, Heidelberg will Leilac-2 is Heidelberg.
Yes.
Certainly for their future plant, Leilac-3 style works. They are waiting specifically on that part of Leilac-3, is their future, but we're saying that other interested companies, not Heidelberg, are able to see what's occurring, are already having been committing to Leilac-3 style operations at this stage of Leilac-2, Leilac-2, or are they also...?
So, when we talk about committing to work today to plan for Leilac-3s on the back of Leilac-2, yes, there are other companies outside of Heidelberg. CEMEX is one of them. We're in the public domain. CEMEX are three projects that are being worked on, and there are numerous others. And we've got to remember that, the Leilac project, the Leilac-2 project, is a consortium project. So I, I'm not sure if it's in our, one of our slides here, but... No, it doesn't look like it. In the consortium is CEMEX, Heidelberg, Cimpor, Portuguese cement company, CRH, one of the bigger Irish, the old Irish Cement. So it's a consortium with numerous cement companies in it already. Okay? It just happens to be being built on the Heidelberg site.
Okay, well, last glimpse of the plan of the future, the big Leilac-3 module. And some of the questions that came back, especially when we'd done the direct air capture announcement with Heirloom, is, well, how big is this opportunity? Well, we said with cement, we've got to build two of these full-scale plants every week from now to 2050 to decarbonize the cement industry. Over 2,300 plants. The direct air capture opportunity is of similar magnitude. So Peter mentioned before that Heirloom are targeting 1 billion tons capture by the mid-2030s. So already, that's just Heirloom, and already that's of a similar scale to the opportunity for us as it is in cement today. And there's been calls that DAC needs to get to 10 billion tons a year.
Now, that would be 10 times the size of the opportunity in the cement industry. So, I'm not saying that that'll happen. I'm not saying that we'll get there. If we get a hundredth of the way there, that's an enormous opportunity for the company. So hopefully that gives you an idea of the sense of the opportunity in Direct Air Capture. And, yeah.
Last question. Thank you very much. Heirloom have said 1 billion tons will be captured by 2055. What's the ramp up? How many... You know, they're doing one plant or two plants now, how many plants do they need to be-- to achieve their objectives, say, by 2030? Because what I'm trying to understand is what's the revenue curve look like?
Yeah. Look, if, if, if they get there, wow, what a journey! No CapEx on our side. It's a license fee arrangement. They'll need, yeah, nearly 2,500 of those Leilac-3 units. 2,500 of them, if they're to get to 1 billion tons by 2035. So what's the ramp up? Bloody rapid. And... Sorry, you go.
But the other question, I see the economics on carbon pricing or, sorry, the pricing for Leilac for cement, and I've seen the comparative pricing.
Yeah.
Can these direct air capture machines, as it were, be, competitive as well on a price basis against the current carbon price, say, in Europe-
Mm.
at EUR 80 a ton?
It's an excellent question. And there's lots of different thoughts about that. I was, a few years ago, a bit of a direct air skeptic, direct air capture skeptic, because the costs are gonna be high. But the thing is, you could locate these plants where you're gonna use or sequester the CO2. So as soon as you remove the need to compress, transport, and then inject the CO2, you're removing about half the cost of a potential CO2 sequestration supply chain from, say, a cement plant, from a more concentrated CO2 capture scenario. And so where direct air capture has an advantage, is you build it, where there's renewable power and a place to put the CO2, and that can take enormous costs out. So how do they then get down to, let's call it the magic $100 a ton?
So if they can get it, even partway there, if they can get it below 200, they're already in the tax regime benefits of the U.S. at $180, and as they go lower than that, then obviously they start to make some pretty reasonable money. Excuse me. What's helping them get there? Companies like Microsoft. Recently, Ford purchased carbon storage off Heirloom at $600 a ton. So you can see how they're part-funding the journey to get to lower cost. And that was the largest Ford purchase of actual CO2 sequestration credits ever done. 315,000 tons worth at $600 a ton. Yeah. So, really, when we look at the Heirloom technology, why did we decide to partner with them?
The technology has about 3 less process steps than any other that we've seen. They use our technology to make lime from limestone. The lime is wet, and that's just sent out, and the whole thing's automatic. It's the little robots that run around, chuck it on trays. So the whole thing is designed to scale and become cheaper and cheaper and cheaper and cheaper as you scale. Those trays are simply put into a tower and left, and there's a natural draft of air, not big fans blowing air everywhere. That's generated by the trays, and they absorb the CO2 over five days or so, and then those trays are collected by robots and brought back and put back through our calciner, and the circuit goes around again. So it's a pretty neat system, and that's what attracted us to Heirloom.
If anyone's gonna, you know, we felt that if anyone was gonna get there, to get below 180 first and then below 100, a simple system with the fewest process steps has the best chance.
And that circuit reusability.
Pardon?
The circuit of reusability has been tested and proven?
Yes. So we carried out quite a few tests over a period a couple of months earlier this year with a team from Heirloom on site at Bacchus Marsh. It has to be scaled. There's still some technical risk. I'm not claiming that this is all completely de-risked. It's got to be scaled, but the looping that we've done confirmed the basic principle was sound, and that we were getting CO2 off, and we're getting a significant efficiency in terms of looping back around again. So, yeah. That was sufficient, I guess, for Microsoft to go, "We're gonna forward purchase 350,000 tons from you." So, yeah. Okay. So quite an exciting, quite an exciting, obviously, deal for us. Very exciting.
Hopefully, the previous slide where I talked about the potential addressable market, it's as substantial potentially as cement, if not more so. Okay, one of the questions we get asked is what to do with the CO2. With direct air capture, they're really locating them close to where you inject it in the ground. But what do you do with it if you're not? Well, you've got to have CO2 infrastructure. In the U.S., I think just overnight, they announced $444 million to enhance the CO2 infrastructure. That's pipelines and these sorts of things for sequestration in the States, the Department of Energy. But if you don't have CO2 infrastructure, what do you do? And here's where we come to quite an interesting project we're developing in Australia.
Port Augusta, it's called the HyGate Project, with Vast Solar there, and the idea is to start to demonstrate the production of a green methanol. Why green methanol? Methanol is one of those fuels that can be burned in a standard engine, and so for some pretty difficult-to-abate industries, such as shipping, if you have green methanol substituting marine fuel oil, you're taking one molecule of CO2 out of the atmosphere. Sure, they're burning a fuel, but because the CO2 has already come from a source that would have been released anyway, you're getting two uses of the one CO2 molecule. So green methanol is of interest to companies like Maersk, and their ships that they've ordered, the next 26 container ships, are dual-fuel, methanol and marine diesel.
The other thing about green methanol is it's great. It's a pretty good precursor to make synthetic aviation fuel. And so when you think about decarbonizing aviation, which is really tricky, long-haul, heavy loads, fuel is the most energy-dense. I think a battery would have to be about 1,000 times more energy-dense to do the same job as a long-haul heavy aircraft. And so synthetic aviation fuel is an area of intense interest, and green methanol is a great precursor to make that as well. So CO2 use into shipping decarbonization, aviation decarbonization, and a neat little project that we're doing in South Australia that's leading us in that way. Just a little bit about sustainable processing.
Obviously, the lithium plant, I think we've covered a lot of this in the top speech, but I won't bore you to death by going through it all again. But this is classic in the wheelhouse of what Australia's trying to do using renewable energy, onshoring value here and focusing on critical minerals. Steel is the other one. A critical mineral, one might say, but a huge, hugely important export earner for us, as I said before. Here, the same core technology, my toilet roll with hydrogen in it, mine ore fines going in the top. Why are we so enthused about this application? This is testing we did. We just put some iron ore through a facility we had at Bacchus Marsh last year.
So what we're seeing here are different little tiny particles that we're putting through our unit. You can see the porosity in those particles that's allowing hydrogen to get in and taking that oxygen off it. And these graphs here talk about what's called metallization. And so that means the conversion of iron ore to iron. And 96% of our exports are hematite, goethite ores, the red stuff, mined over in the Pilbara, et cetera. And here's the performance curve for those hematite, goethite ores, up over 90% metallization. And these were just the very first tests we did without optimizing the unit. So all the tests we're doing now is a much more optimized unit. You can see down here, this ore is called magnetite. Only a very small proportion of ores in Australia are magnetite.
But we thought we better test it because magnetite is the ore that's suitable for electric arc. And so, while we haven't optimized that yet, we still got some excellent results from magnetite. It's a much denser ore. It's not nearly as porous as hematite, goethite. You can see these measures, what's called porosity. And so, yeah, the magnetite ores are not as porous. So we've got some levers to pull on magnetite, but really the focus is hematite, goethite. As I say, this is a real Australian opportunity to make a green iron here with renewable electricity. So phase three underway with an expanded ore testing program. Lastly, I'll just touch on magnesia.
Again, Peter talked about the businesses coming together: the water, the marine, coatings, the antimicrobial resistance. All really exciting stuff. Some of that will be fairly long-dated. We're making some great progress in the antimicrobial resistance. I think that's a real sleeper for the technology. This is where a very high surface area magnesium oxide particle, that we make in our reactor, is showing antimicrobial, antibacterial, antifungal. So all of those three, agriculture, marine, and antimicrobial resistance, are just properties of the stuff that our unique calciner produces. But the last little bit, magnesium metal, goes right back to the heart of decarbonization and also critical minerals. And so that's quite an exciting one for us. 86% of the world's magnesium metal is produced in China. The next biggest producer, at 8%, is Russia.
And magnesium metal is critical for lightweight, strong metal components for aviation, aerospace, these sorts of things. So that's why it sits there as an absolute critical mineral. We've already got the technology that can decarbonize with capturing the CO2. We've already got a mine, and so we're having a look and seeing what sort of project we could develop around magnesium metal here in Australia. Especially since the recent noises about what's classed as domestic production between Australia and the U.S. We're hoping the last visit by the Prime Minister was gonna give us a few more details on that. Still none coming, but we're watching and waiting with interest, and we're very well positioned with the assets and the technology we have in that space.
So, just in terms of what we're trying to achieve this year, I won't go through them all in detail. I've been through the highlights, but we're on track for all of them. So it's a great start to the year. And lastly, what I'll touch on is really, really the overarching strategy of the company is to look at how we accelerate the commercialization of these technologies as much as possible. And one of the areas that we did back in 2021 was to start to spin out the lime business, to focus some resources into that business that are cement-backed resources. So we talked about the new people we'd added to that business. You should see the backgrounds of these people. We've been publishing them in a newsletter, so hopefully you've read it.
But all background in cement, lime, and processing. So that capability in the lime group has been substantially enhanced over the course of the last 12 months. And so that is of interest to us as we look at some of these other businesses. So how do we take iron and steel forward in the best way, for example? And what could it be worth? You know, because in the end, the other thing that looking at spin outs achieves is giving people some look-through value on what these businesses are worth. Now, how much is iron and steel valued in Calix's head company at the moment? I would argue it's hardly valued at all. Have a look at what some of these portfolio deals value, iron and steel decarbonization technologies at similar tech readiness levels. H2 Green Steel, their valuation's multi-billion.
They're a bit more advanced than us in terms of permitting. They've got a big steel facility they're building in Sweden, but the core technology for their decarbonization is no more advanced than ours. Boston Metals, probably even behind us a little bit. You know, the tests we're doing are 2,000 ton per year type throughputs. We're big pilot scale. Boston Metals are hardly out of the lab, yet they've raised $262 million. We don't know what publicly that values their company at, but it's likely to be at least $500 million.... So these are companies pursuing the same thing we are. Much the same tech readiness level.
And so when we come to think about how we accelerate iron and steel, similar to the sort of deal we did with Leilac, that's the sort of thing that-- that's the flexibility we have in the business model that we have. So iron and steel, direct air capture, some pretty amazing deals done as well. And so when you look at the capital markets, you look at some of the volatility in those markets, interest rate concerns, and those sorts of things, is money been going into, environmental technologies, ESG? Is money going into these sectors? Absolutely. And it's not just, down rounds and low valuations. There's, there's a lot of interest and a lot of money that is being done in these deals, as evidenced there. That suggests that there's plenty of interest from impact funds, from strategic investors in decarbonization.
So lastly, the one thing about this I wanna leave you with is this, you know, we're developing as a solution in cement and lime. It's one of probably half a dozen solutions that are being developed in cement and lime, but not like thousands. We're one of half a dozen. Iron and steel, same technology. And again, in iron and steel, there's not thousands of solutions. There's only half a dozen today that will ever decarbonize iron and steel, and we've got that as well, all in the one tech. So that's what makes it so exciting, and that's why we're working so hard. So I'll just finish on thanking everyone, all shareholders for their support for the company. We've, as you can see, got a great board. We've got a great team. Please visit us.
Let us know if you want to visit us at Bacchus Marsh facility. We'll show you around what we're doing there. You know, the reason why you see the passion in this business is because of the potential and because of the need. So again, thank you for coming along to the AGM, and happy for questions.
Questions. Well, thanks, Phil. It's a great story, and I think it's just... Yeah, well, of course, I've got a vested interest in it, but it's a really great story. But a lot of my friends and relations who are not part of the investment community get very frustrated. They keep asking me, "Why don't we hear about this in the newspaper, The Herald or what have you-
Yeah.
The Australian, on ABC TV, or even the other commercial channels? Also, there's increasing anxiety among everybody about global warming.
Yeah.
I mean, you can't do it all.
Mm.
But, it's a great message of hope that you could bring to a much wider audience, particularly schoolchildren. I attended a rally the other day at another shareholders' meeting, and I heard this young woman just give the most... She's a schoolkid, gave the most passionate and amazing address to the fellow demonstrators. Will Calix do more to get the, this message and the, and the interest? I mean, there's educational interest about the technology-
Yeah.
that you very well are able to bring to a, the level of, us, mom and dad, us, mom investors. Do more to get the message out to the wider audience.
Mm.
and the potential mom and dad investors, probably millions of them out there. And particularly to get maybe some people to talk in schools and get the message to the schoolkids that, yes, there is hope.
Yeah. Now, look, it's an excellent question. We always are working on our message. You know, I'm gonna ask Darren for a budget to buy a few more of these to—so others can help me spread the word. But look, I think it's a hugely valid question, Elizabeth. With technology, you always, I guess, struggle to break through in the ten seconds of people's attention these days. We're revamping and updating all of our marketing to try and make it easier for people to see who we are and what we're trying to achieve. So we're developing a new website. We're really trying to focus the messages.
We're trying to make it much, much easier for people to understand who we are and what we're trying to do. I've got to tell you, where we're known in government and where we're known for those companies that want to decarbonize, we're very well known. The general public is not an area that we've done as well on, so, I'll take that on board. I think we've got great sort of engagement with, I guess, the government and the corporations, the interest in the tech for various reasons. But, absolutely, we're working on it. But, the outreach is a great idea.
Mm.
We're doing something similar just out of Bacchus Marsh. We go and talk to the schools and invite them to site and those sorts of things, but we could consider a wider program for sure.
You might call about it. See how it...
Would you like a job over there?
Take it. There was an organization called Australian Science Communicators. People like Robin Winston.
Hmm.
...
Well, we've got, you know, James O'Loghlin, the chap-
That might be in place.
Yeah. No, we've we're publishing a series of webcasts with James O'Loghlin, the host of The Inventors, if you remember James. Yeah. So we are trying to enhance that and make it more easy for the public to access what we are.
Well, yeah.
Mm.
Get an exciting-
Yeah.
Australian development.
Absolutely. Absolutely. We will do our very best.
I noticed that there was reference in some of the slides to batteries, and I was just wondering, now, my impression about some of these batteries is they're quite dangerous. They've started some pretty big fires and that sort of thing. How do you see the future of these batteries? And could you have any influence on that through your technologies?
Yeah, absolutely. And, and look, I've focused on decarbonization in my talk, and that doesn't in any way downplay the efforts and the achievements we've had in batteries. So our focus in batteries was for a safer chemistry, lithium manganese oxide and now lithium iron phosphate. These very high-powered batteries that are in the big, you know, the Teslas of the world and those sorts of things, they're the ones that can actually have a runaway temperature at lower temperatures. So there is absolutely a place for safer batteries. And of course, we don't need to accelerate from 0 to 100 in 1.5 seconds. The people's car, let's call it, I think there's absolutely a place for those types of batteries, too. Commuting 150 kilometers a day, those sorts of things, rather than this range anxiety.
You know, I've got to get to 500 miles a day. Absolutely, the people's car, those sorts of safer batteries, I think are gonna be, you know, really the standard.
Yeah, I think that's for the whole process of being accepted by the public, the batteries need to be made a bit safer.
Yeah. Yeah. No, I agree.
Hello, Mark. Is this on? I'm a shareholder. Have you ever thought of looking... I've actually done some research to copper, and I was surprised at how much is used in electric cars. I was wondering if you were doing anything on copper, plastic, fast fashion to reduce that. My passion, of course, is water. Making money. Profits.
Well, the magic combination. So, we normally don't let Mark speak because... But absolutely, we normally don't let him speak because what he tends to do is,
Okay.
Tell about the 99% of other stuff that we do, that we don't talk about. But Mark, would you like to answer this one?
Copper is a very minor one. It's the least. Pretty much every mineral process uses pyroprocessing. They use old technology, been around for 50 years, and we can replace pretty much all of that. So yes, this is a role there.
Mm.
I just have to worry about lime and cement and not on steel, but it will happen. The mineral industry is moving in Australia very quickly to electric-powered calciner. It's obvious.
Mm.
So we'll be there.
Phil, there's a comment online from shareholder, and I'll just add, it's not my wife, and it's not your wife, but I believe it. It's from the Tecoma Group of Brighton Limited . So, I would like to acknowledge the exceptional efforts of our management team. That's my comment. Including the entire Calix board and Calix leadership group. Their leadership has been crucial over the last 10 years in transforming Calix from a small start-up into a company adept at collaborating with major corporations across various mineral applications. I would like to express my gratitude for their role in shaping our successful business model and steering us towards a sustainable future through rapid commercialization of the core technology.
Thank you.
That was not my wife. And I was-
That's not your wife either.
Thank you very much for that feedback.
One potential roadblock is the success of sequestration of carbon dioxide. You know, you read it, I think Chevron have not captured, sorry, stored as much carbon dioxide as they said they were going to.
Mm.
So can you speak to that? Is that a roadblock for Calix, or are you confident that the sequestration science and engineering is actually gonna equal your ambitions, I guess?
Yeah. No, it's a, it's an excellent question. I think, you know, Chevron's held up as a, as a failure. In fact, technically, it's been a big success. It was the promises that were made about total quantities and these sorts of things to get the project up, that I think led that project to put too high a bar on what was technically feasible to achieve. But they're storing hundreds of thousands of tons of CO2 a year. And so there's the Otway Project in Victoria, that's been storing CO2 underground for 15 years now. And so CO2 sequestration is not unproven, it's proven. It'll be horses for courses. There are different geologies that can be utilized. And so each one will need to be tested.
But I think the knowledge about what's required to store CO2 is, is pretty good. So yes, sequestration is one of those things that, technically, you've gotta, you've gotta prove up as you do it. I think from a permit perspective and from a public acceptance perspective, there's work to do. And I guess the, the, the key thing that, that we really like to say about a project in South Australia is looking at this alternative use for CO2 as a, as a sort of once-through fuel. As I say, you, you use the one CO2 molecule to do a couple of things. You know, make your lime, and also, a sustainable fuel. So just in terms of volumes there, you know, shipping is responsible for 2% of global CO2, aviation for 1%.
And so the process emissions from cement and lime could really supply all of the shipping and aviation requirements. So sequestration is important. Don't... I won't step back from that. It's important. It's technically feasible. It's technically proven in certain applications already. But other uses are gonna be important to develop as well. Any further questions or online?
Nothing online.
No, nothing online. Bill. Okay, again, thanks, thanks once again. Of course, the directors will be available after the meeting if you'd like to have any one-on-one chats, et cetera. And hugely appreciate, again, your support and for coming along today.
Where are they gonna be?
Oh.
Just remember. Don't forget the blue cards.
Yeah. I think the Boardroom team are outside and can collect them.