Thank you for standing by, and Welcome to the Lynas Rare Earths full year 2024 results briefing. All participants are in a listen-only mode. There will be a presentation followed by a question- and- answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to turn the conference call over to Lynas. Please go ahead.
Good morning, and welcome to the Lynas Rare Earths investor briefing for the 2024 financial year. Today's briefing will be presented by Amanda Lacaze, CEO and Managing Director, and Amanda is joined today by Gaudenz Sturzenegger, CFO, Pol Le Roux, COO, and Daniel Havas, VP of Strategy and Investor Relations. There'll be a Q&A session following the briefing, and we ask that questions are limited to one question per session. Thank you. I'll now hand over to Amanda.
Good morning, everybody. As always, thank you for joining us as we brief today on our FY 2024 results. I think as always, there are a few surprises given the detail that we provide in our quarterly reports. Just before I start, read the disclaimer carefully, please, everybody, and particularly as a minerals company, we would like to acknowledge the traditional owners of the lands on which we live, work, and meet, and also acknowledge and value our Aboriginal and Torres Strait Islander employees, partners, and communities, and pay respect to their elders, past and present. The market this year was depressed, and I think even a casual observer would have seen that. It had the lowest sustained prices since twenty twenty and slower demand growth than we have seen over the past four years.
In this difficult market, Lynas delivered an EBITDA of AUD 132.1 million and maintained a very strong balance sheet. While this outcome was a reduction versus the prior year when prices were much more favorable, it reflected our continuing focus on capturing cost efficiencies across the business. Operationally, we made decisions on production that reflected the muted market. We reduced total rare earth oxide production. The prices for lanthanum and cerium products were lower than the cost of production of those materials, and we elected to reject some of those products early in the process. NdPr production reduced by 8%, primarily as a consequence of the extended shutdown when we undertook major works at our Lynas Malaysia facility at the end of last calendar year.
Following the variation to our Malaysian operations operating license, which we received in October 2023, we were confident to undertake that works program. This investment provides us with a progressive uplift in separation and finishing capacity to 10,500 tons per annum. And a further significant investment in our Malaysian operations is the implementation of our project to separate dysprosium and terbium at our Malaysian operations for the first time. Of course, as all investors know, we continued with our significant capital plan, including construction, completion, commissioning, and start-up of our Kalgoorlie plant, and completion of stage one of our Mount Weld expansion program and commencement of stage two. Our first core value in Lynas is care, and that is articulated that we care for each other, and we make sure we all go home safe and well.
In financial year 2024, we were pleased to record a reduction in lost time injury frequency rates, and we were very proud to deliver the Lynas Malaysia works program injury-free. This was a very significant program of works, the most significant since the plant has been constructed. We were not pleased with an increase in our total recordable injury frequency rate, and we have reviewed and improved our health and safety programs for financial year 2025. Last year was a busy and challenging year with many significant achievements. We delivered profitable outcomes in a very difficult market and set the foundations for future success as the market rebounds. Early in the financial year, we delivered one of the most important outcomes for our business and our shareholders, with the variation in our Malaysian license.
This allows us to continue to import and process lanthanide concentrate from our Mount Weld concentrator at Lynas Malaysia. The Malaysian Government has now clearly articulated its policy to develop the Malaysian rare earths industry, both upstream and downstream, and has placed Lynas and recognized Lynas as a key part of that development. We are very excited to have a platform for sustainable operations in Malaysia and are progressing our investment program accordingly. You will note our investments in the permanent disposal facility for current residues, and alongside that, our cooperative research program, under which we aim to develop a process by which residues can all be under one becquerel per gram of radiation. This gives us confidence to progress our investment program in Malaysia, including the uplifting capacity and new products, particularly dysprosium and terbium.
Our costs were reduced by 17%, while NdPr production, which I think, as everyone knows, is our core value driver, reduced only by 8%. Initiatives to improve the flow sheet at each stage and deliver better recoveries were at the heart of the cost improvement, alongside our usual focus on, optimizing procurement and workforce efficiency. In the year, we had the first shipment of mixed rare earth carbonate from our new Kalgoorlie facility. It has now been received and processed, in Kuantan, successfully. While we were disappointed with the increase in cost, to construct the Kalgoorlie facility, we are incredibly proud of this new facility and confident it will serve us well as the market continues to grow.
Of course, we are a minerals company, so our ongoing success and sustainability is founded on our Mount Weld ore body, and progress at Mount Weld this year has been really exciting. We recently released a new resource and reserve statement. We've got our expansion program, and we also had the signing of a new five-year contract with the Carey Mining Group. So this slide really speaks to itself. 92% increase in mineral resources from our June 8, 2018 statement, a 63% increase in ore reserves, 46% in total rare earth oxides, and very importantly, a 92% increase in contained dysprosium.
That gives us over 35 years mine life at current production rates of 7,200 tons per annum NdPr, or greater than 20 years at our expanded production capacity of 12,000 tons per annum of NdPr oxide. The updated statement does not include the fresh carbonatite. It is based on 84,000 meters of drilling in the saprolite zone, down to a depth of 200 meters, and it has significantly enhanced our understanding of the various zones within the Mount Weld ore body. As you can see from these figures, that extensive drilling has enhanced our understanding of the mineralogy. Perhaps the most exciting discovery is the expansive heavy rare earths halo, shown here by the yellow blocking.
The contained heavy rare earths, specifically dysprosium and terbium, proves Mount Weld is not just an exceptional source of light rare earths, but also an exceptional world-leading heavy rare earths resource. The increase in mineral resource comes from lateral extension of the mineralization, additional heavy rare earths elements mineralized zones, a new deep apatite zone defined below the current pit, transitional and fresh mineralization below the 2018 life of mine pit shell, and mineralized clay zones above the saprolite ore zone of up to 3% rare earth oxides. The Mount Weld ore reserves are now 32 million tons at 6.4% total rare earth oxides for 2 million tons of contained TREO. Key changes compared to the 2018 ore reserves include an increase in ore reserve tonnage by 63%.
The average grade has reduced from 8.6% - 6.4%. That reflects depletion and a revised cut-off grade based upon our improved and enhanced understanding of processing. Contained total rare earth oxides have increased 22%, and contained Dy oxide has increased 92% from 6,660 tons - 12,790 tons. This new resource and reserve statement validates our view that continuing investment in exploration of the Mount Weld ore body offers the most economic pathway to continued supply of rare earth elements, both light and heavy. A 63% increase in ore reserves following 10 years of mining operations is an excellent outcome from this most recent exploration program.
It has identified truly new reserves and our ability to reduce the cut-off grade to 2.8% based on our proven processing capacity and the introduction of the new DyTb separation circuit in Malaysia. We've now included our tailings, which grade at 7.6% in the ore reserve, based on the new processing capacity offered by the Mount Weld expansion program. We've had this goal for some years and have carefully managed our tailings to allow us to recover them. New resource, new understanding of the geology and metallurgy in our ore body, and firm plans for developing and processing those materials. Our geological and metallurgical teams have worked very hard on this program over the last two years, and I would like to specifically thank our partners at JOGMEC, who provided two expert geologists who worked alongside our team to do that work.
At Lynas, we believe that it's not only what we do is, that's important, but how we do it that is important. So ESG is not an external imposition to be taken, you know, with a bit of a grimace on our face. The principles start at, you know, sit at the heart of everything we do. We believe sustained prosperity can only be achieved when our people and our communities share in that prosperity, and this slide shows some examples of our initiatives during the year. Just turning to the market. The market was difficult in FY 2024. Demand growth moderated. Still grew, but it moderated, at the same time as China released increased mining and production quotas. This misalignment resulted in overstocking in the Chinese market at the same time that the demand moderated. We are very pleased to see the recent firming of prices.
Our intelligence indicates improved inside China demand and reduction in inventories, and we are optimistic with the new, significantly moderated quotas released last week. We will see continuing improvement in market dynamics. We operate in a volatile market, and we cannot hang our heads just because we have low prices. We are always energized to ensure we can compete even when the price is low, and FY 2025 is the strong evidence of that. But as it is inevitable there will be times when the price is low, it is also inevitable that the market will improve, and we will be prepared for that with our program of works to ensure that we can meet increasing demand.
At Mount Weld, we made significant progress on the growth plan, our mining operations, our new partnership with Carey Mining, one of Australia's first ever Indigenous-owned businesses, the completion of the exploration drilling program, the Mount Weld expansion going very well, and the release of the new mineral resource and ore reserve update. This is a picture which brings joy to my heart. It's our new filter building. One of the areas where we've had persistent challenges with safety has been in our filtration and dewatering process at Mount Weld. This new building contains state-of-the-art filter presses, automatic, which will significantly reduce risk to our employees in our operations in Mount Weld. Stage one of the expansion is complete.
We're in the process now of commissioning it, and we will progressively bring it into our flow sheet, to debottleneck, the dewatering circuit, which has been the Mount Weld bottleneck for some time. We also have commenced early works on the new, 65-MW gas-firmed hybrid renewable power station, which will significantly reduce, our greenhouse gas emissions, on, on this new expansion. The Kalgoorlie facility, isn't it a thing of beauty? The ramp up now, that we have the Malaysian license in place, and as we look into the market, will be managed to align with both the Mount Weld and the Malaysian production capacity uplifts. We did have a successful first shipment of MREC in the June quarter, and we continue, to, progress the ramp-up of that facility.
Now, we will start to switch our focus to efficiency and initiatives which will improve the cost competitiveness of that facility. And in Lynas Malaysia, we have had a very exciting year. Of course, the variation to the operating license is very reassuring and high value-adding for our business. It enables full operations and allows us to confidently invest in further development. The photo here shows our new mixed rare earth carbonate receiving facility, completed, commissioned, and operating. Our team has implemented a very cost-effective improvement in our flow sheet in solvent extraction, which allows us for really minimal investment to increase our separation capacity to approximately ten and a half thousand tons per annum of NdPr. And of course, I've mentioned already a couple of times, the DyTb separation circuits.
In the U.S., during the year, we signed the follow-on contract with the U.S. DoD for the construction of the heavy rare earth plant. We've done a huge amount of work on engineering, procurement, and approvals. Unfortunately, while we got the national environmental approval, that it was a project of no significant impact. A permitting issue has arisen related to wastewater management. We think it is unlikely this will be resolved this year, so the earthworks, which we had previously planned to commence this year, will be delayed until that matter is resolved. With the implementation of the DyTb circuit in Malaysia, we don't see this being significantly affecting in terms of our ability to meet our customers' needs.
Of course, we cannot prosper unless the communities around us prosper, and we continue to be very actively engaged across a variety of different programs with our communities. So at Lynas, we are productive, we are profitable, and we continue to grow. We are fit for today when the market has been less pleasing than it was at times over the last two or three years. We have worked to ensure that we sustain our cost muscle, but we are also making sure that we are fit for tomorrow, and that includes both making sure that we have the capacity, the operating competence, and the products to meet the market as it grows in the future. So with that, I'm very happy to take questions. As I said, best I'd like it if you could just ask one question at a time.
That way, everybody gets to have a turn.
Thank you. If you wish to ask a question, please press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star and two. If you are on a speakerphone, we do ask that you please pick up the handset to ask your question. In the interest of time, once again, we do ask that you please limit yourselves to a single question. Our first question comes from Paul Young from Goldman Sachs. Please go ahead with your question.
Morning, Amanda and Pol and team. Amanda, my only question is actually on operating costs, which I just wanna wonder if you could step through and just provide a bit more of color on operating cost performance. Just maybe to quote a few numbers, your costs were AUD 280 million in FY 2024. That did come down by about AUD 60 million. I'm talking about OpEx, excluding G&A. I mean, your production came down during the year. But and there's probably some other factors there. So what I'm trying to get to is, as you ramp up production, what is actually the starting base for costs? And from perspective of fixed versus variable, what are you seeing on chemical inputs?
What I'm trying to get a sense of is, with production increasing, you know, where will absolute costs go? 'Cause my sense is, by the way, that, you know, the street's just way too high on operating costs relative to what they're forecasting for production.
Yeah. So, Pol, I know that Gaudenz would be happy. Gaudenz and Daniel would be happy to have a bit more time on this with you as well. But I think that you are right, that we look at our costs. We look at them, of course, on a unit cost as well as a total cost basis. On a unit cost basis, we continue to target further reductions, so we saw unit cost reductions this year. Some of that came from reductions in input costs. A fair bit of it came from improving our operating efficiencies, which was not just availability, but it was particularly in recoveries. And so, I think we continue to improve our understanding of the interdependencies and recoveries, right from the mine through to finished product.
Understanding what we might be able to do, even at the concentrator, that is ultimately gonna deliver a better outcome in, you know, in our processing facility in Malaysia, has been a standout success this year. Probably, the most important thing is that in our cracking and leaching facility in Malaysia, we were able to significantly improve recoveries this year, and that came, some of that improvement started before we did the major works, and some of it came after we'd completed those works. The year that we've had the very best cost performance in our business was in 2019, when we had a very, very stable operations and, we continued to use that as, you know, sort of a minimum benchmark in terms of targeting.
We, you know, we're targeted on continuing to get back to there. The other thing that really did affect it, as I said, is that we selectively rejected some of the lanthanum and cerium early in the process. The process of taking those, once they're separated and putting them through the precip and the calcine circuits, it, you know, is greater than the cost that we can recover in the market. So we right-sized the amount of that material that we produced. That allowed us, once again, to really optimize our assets. I'm conscious we have Pol on the line as well, and a lot of this has been done within Pol's area. If...
I'll just invite him, if he wanted to make any further comments on that.
There was a lot of improvement done in the past year on both variable costs and fixed costs in production. So, variable costs, despite prices of chemicals and energy being higher than 2019 , we have substantially improved our cost position, thanks to better recoveries, reduction of chemical usage and energy usage, so which is very good. And a lot of work has been done as well on the fixed costs, through optimizing the sharing of work between the sites, and this will continue, of course. Costs are measures, and we plan to keep building our measures over time. So very, very good achievement on the team.
Great. Thanks, Pol. Just can I ask a quick follow-up, Amanda, just on cost again? I mean, as far as I know, you've been capitalizing calcining, cracking and leaching costs. I presume that we'll start expensing those a little bit over the next 12 months. But just on the uncontrollable costs, and chemical imports, do you know if you've unwound the high cost inventories, like, across all your chemical products, and we're back to, you know, chemical imports being at more normalized pricing?
Across the business, yes, largely so.
Okay.
Yeah.
Great. Okay, thank you.
You're right, Paul. Kal will come in. We're assessing at present with the auditors at what's the right time for us to make that transition from the capital to the operating account.
Yep. Thanks, Amanda. Maybe just lastly, I know you don't give production guidance, and therefore you don't give cost guidance, but again, I just think that the street's too high on cost, by the way. Is there anything, any way you can help the street, would be, I think, helpful for your company?
Okay. Thanks. Yeah, we'll think about how we could do that better. Thank you.
Thank you.
Our next question comes from Chen Jiang from Bank of America. Please go ahead with your question.
Good morning, Amanda. Congrats on the Mount Weld resources and all reserves upgrade released on fifth of August. I just have one question for the production outlook, and I know you don't provide guidance. Just look at the market started to rebound in the last four weeks. July, when you released the quarterly, the NdPr price was averaged $50 per kilogram, but now the spot is, like, $55 per kilogram. How can we think of Lynas NdPr production versus your capacity of 9,000 ton? And also remind us any major maintenance work or shutdown that would impact the production. Thank you.
Thanks, Chen. Five years ago, we set ourselves the target of being able to produce 10,500 tons per annum of separated NdPr in this financial year. It remains our target that we will demonstrate that. However, looking into the market at present, we don't feel it's necessary to sort of jump to that number right now. I think that the market is adjusting to slightly more moderate production levels, and the Chinese quotas assist us with that. But certainly, through this year, by the end of the year, our objective would be to be able to demonstrate our abilities to sustainably produce at the number that we have targeted now for quite some time.
That effectively means that we need to have both, Kalgoorlie and Malaysian cracking and leaching, performing reliably, at target rates, and we will optimize the proportion of production between those two. However, that's not gonna be what we do, particularly in the first six months of the year. We think that it's quite important not to provide any more supply side pressure into the market as it readjusts and, and as the price starts to improve. As you've noted, Chen, it's very pleasing the way that it's improved over the past, month or so. I said to Pol that we could have some Australian sparkling, but not champagne, not yet. So, this year, we will have some additional works that we will do at the Lynas plant, and we'll probably do that towards the end of the year.
That's related specifically to our cracking and leaching facility there. But our objective at this stage is that we will be able to continue with downstream production with that feedstock being provided from the mixed rare earth carbonate from Kalgoorlie during the time that we actually have the cracking and leaching facility in Malaysia shut down. But it will be a modest stepping up quarter- by- quarter, rather than attempting to go full blast on you know sort of day one, because we think that it is quite important to support the market coming back into a more like an equilibrium between supply and demand.
Sure. Thanks for that, Amanda. Just maybe if I can have a follow-up from your answer. So, I know one question, but it's a follow-up from my, you know, single question. You mentioned additional works towards the end of FY 2025. How big is the supply? I mean, you know, is there a shutdown, or how should we think about the supply disruption? Like, just trying to smooth out your, you know, the production forecast quarter over quarter.
At the end of this calendar year, we will have to do some work on one of our kilns in Malaysia. One or maybe two, Pol, I can't remember. So we actually have to do that at the end of this calendar year. We're hopeful. We're working on the ramp-up and the way that we manage the mixed rare earth carbonate inventory that comes from Kalgoorlie. It should not have a significant impact on finished goods production. The amount that we produce will be what we choose to produce, given market demand, as opposed to necessarily being determined by the you know the facility and any maintenance activities that we need to undertake.
Sure. Sure, understood. Thank you so much, Amanda. I'll pass it on. Thank you.
Thanks.
Our next question comes from Al Harvey from JPMorgan. Please go ahead with your question.
Good morning, Amanda. Just wanting to get a little bit more on the permitting issues in the States. What are the steps that we need to see to resolve this? Is it likely to resolve in calendar year 2025? And just extending from that, I guess the updated timeframe to commission. I think with the DoD funding update last year, had been an FY 2026 target for it being operational. How should we think about this delay? And then I will sneak in another final question, just how you're thinking about system capacity more broadly, 10.5 from LAMP, 1.5 from Texas. Do you still think about going further beyond that in the medium term?
Thanks, Al. The wastewater permitting situation in Texas is quite complex. I don't propose to go through sort of line by line. Suffice to say that we selected this site because it's alongside, you know, a very big brother, which is Dow Chemical. They have a particular issue that they are dealing with, and we can't move to the next stage of the approval process until that issue is dealt with. So we're working closely with them and engaged with the USG, so everybody is fully aware of the implications. The... We don't have, you know, when we first looked at this, you know, we hadn't finalized our thinking on how we were going to be able to really increase our separation capacity in Malaysia.
Today, we don't have, you know, sort of a huge amount of supply side pressure to accelerate this. You know, it's not going to fundamentally affect our ability to meet our customer needs because of the rest of the work that we've undertaken on our capacity and production configuration. So the U.S. project is one which we think is valuable and good to have. It's part of our ambition to have a footprint geo-geographically around the world. It's not got some of the time pressures that we may have perceived previously. So the fact that this has come up as an issue, we can just work through it in due course. I'm sorry, Al-
Thank you.
-because I forgot what your follow-up was. I noticed that the one question rule is being honored in the breach. So,
... just, if, like, if you don't mind, just, I guess, how you're thinking about system capacity in the medium term, and if markets did recover to a level that was acceptable to you and the team?
Yeah. So I think our first milestone is get to the nine thousand tons, which is, you know, absolutely consistently on spec, on time, all of those sorts of things. And that's pretty much where, you know, sort of where we're aiming to make sure all of our SX circuits are there. And I think as we mentioned, we're, you know, managing our product finishing at present to be able to do that. But we have new equipment coming in, new rotary kilns for product finishing and some other equipment to allow us to do that. And they will be coming in later this year. The next step is the 10,500 tons, which we aim to demonstrate in this financial year.
The next step after that is logically to 12,000 tons because that's, you know, our target at Mount Weld, and we will have two paths to be able to do that. We will have more potential to do additional separation in Malaysia, or we will have the facility in the U.S., and so that becomes the next step, and I think that what it does provide very clearly is evidence that we can meet market demand, certainly over the medium term, particularly from outside China customers, both magnet makers and magnet buyers.
Thanks again, Amanda.
Our next question comes from Reg Spencer from Canaccord Genuity. Please go ahead with your question.
Hi, Amanda. Just one question.
I'm sorry, I can't hear you.
Sorry, Amanda. I will stick to the one question rule this morning. Relates to the CapEx guide for FY 2025. Are you able to give us some kind of split on what remaining capitalized costs there might be for Kal, remaining CapEx for the Mount Weld expansion, and what you might plan to spend in Malaysia?
Sure. So the lion's share of that is completing the Mount Weld expansion. I think I can't see Gaudenz's. But it's about 65% of what we're sort of estimating is the total spend, maybe a bit more. Then there's you know, the mop up at Kalgoorlie, which is now you know, relatively small. We've spent a lot there over the last you know, three years. And the LAMP industrial plant, we still have over this year and next year some tens of millions of dollars that we will spend in Malaysia. But the lion's share is completing the Mount Weld expansion.
That's fabulous. Thanks very much, guys. Appreciate it. I'll pass it on.
Thanks, Reg.
Our next question comes from CLSA. Please go ahead with your question.
Yeah. Hi, Amanda and team. Just a question on your statement that you're promoting fixed pricing and long-term contracts. Not sure if this is something new. Can you just provide a little more detail on the promotion of these, on the fixed pricing and the development of the long-term contracts? Are there any in place? Are there any specific floors or ceilings in the discussions? And also just a brief comment on... I know we've talked to some Chinese magnet makers, and they've mentioned that they're receiving quite a bit of pressure from European customers to diversify their supply chains. Are you seeing similar pressures? Thanks.
Okay. So, the situation with the contracts, it, it's not new news. You know, the idea that you would seek to have a pricing portfolio where you have a variety of, formula associated to the pricing, is something that we've talked about for, I don't know, eight years. You know, we do have some customers who are on fixed prices. We have some customers who are on floor-ceiling prices, and we have some where we have, agreed a premium above the market price, but it follows the market price over time. We don't disclose the specific prices that we sell at. It's commercial in confidence, but it's not, it's not an earth-shattering new concept, unlike, some people might have you believe. We aim to optimize our pricing at all times.
We don't sell anything into the spot market, and we think that that is beneficial. Everything that we sell is on a contracted basis with some price formula associated with it. In terms of the European market, the critical CRMA. Maybe I've got my acronym wrong. But anyway, the Critical Raw Materials Act in the EU certainly requires EU consumers to use more material, which is interestingly, there is one requirement for material sourced from the EU. Now, whether that's mined or whether it's recycled, I guess, is something that is a matter for the EU. But certainly, then there is a proportion which is to be processed, and processed at, you know, outside of China.
This idea that there's a singular supply chain on which Europe is dependent, the EU is attempting to address that matter. We see that, and we are working with magnet buyers, actively working with magnet buyers in Europe, to find ways to ensure that they are able to meet the regulations. I think as we think about the development of the outside China industry, on which you know which is important for all of us, including I would suggest even the Chinese who quite like their monopoly, but or quasi-monopoly. Having said that, a robust market will be more you know a diverse market will be more robust.
I think we see both the U.S. government and the EU government really adopting a, I call it, you know, sort of the carrot-and-stick, you know, get the donkey moving strategy, but they have both carrots with things like the Inflation Reduction Act in the U.S., but they also have sticks like the CRMA in the EU or some other sourcing legislation that they have in the U.S. We will all be better if there is more development of the outside China industry, and that's not just about resource, 'cause frankly, you know, if you put Mount Weld and say Mountain Pass together, you've got, you know, pretty much resource that you need. It's really about downstream industry development as well.
Okay, great. Very clear. I'll pass it on.
Our next question comes from Daniel Morgan from Barrenjoey. Please go ahead with your question.
Hi, Amanda and the team. Could I just return to Pol's earlier point on operating costs, if I may? In 2019, as part of your answer, you said that was a you know, benchmark cost year for you. I estimate your costs at that time were about AUD 40 a kilo of NdPr. Is that something that might be attainable this year or close to? Or you know, any quantitative guidance at all on operating costs, I think, would help the market, 'cause I do share Pol's view that operating cost estimates might be a little bit high.
It is in our sights, and I think we are quite determined that we will be able to achieve that sort of cost level, but the problem with guidance is that I'm not going to put a noose around my neck on the date that we achieve that, but we believe that we have a series of initiatives that will allow us to be in the vicinity of that sort of number on a like-for-like comparison, but bear in mind that in this year, we will be bringing Kalgoorlie into the equation, and that, therefore, will give us some different cost pressures, and at this stage, we have not done the work to optimize our costs at Kalgoorlie, so I don't wanna make any promises about how low we can actually get our total costs in this financial year.
But we know that our success over time is dependent on us being the lowest or close to lowest cost producer in the market, and we continue to have a core focus on delivering that.
Okay, thank you very much for your perspective.
Thanks.
Our next question comes from Austin Yun from Macquarie. Please go ahead with your question.
Morning, Amanda and team. I can hear multiple questions being asked. Maybe just a quick follow-up on the CapEx guidance. The AUD 400 million-AUD 500 million is quite a wide range. I'm just wondering, what's the kind of a pulling factor of non-committed programs that you have that could take place in next year or could be delayed? If any kind of that you can provide us with be appreciated. Thank you.
Yeah. So thanks, Austin. So the reason why it is a range, and you're right, it's relatively broad. We will, of course, actively manage our capital program to be fit for purpose with, you know, market conditions. We're not gonna just keep spending money on capital if, if the market remains, you know, sort of difficult. And we have identified the programs which could either be moderated or delayed as part of that process. You know, as I said earlier, the Mount Weld expansion, and I can tell you, we as we were looking into this very, you know, sort of difficult market, we have three times gone back around and looked at that, and looked at would there be value in delaying the second, you know, the stage two of that? What would be that value?
What would be the cost to disrupting what we've got, which is a very efficient project in implementation at present. We have made the decision that we will proceed with that project and complete it in this financial year. But we do have other projects. And, of course, we don't really have an option but to complete, you know, sort of the final stages in Kalgoorlie. The stage at which we make the transition from the capital account to the operating account will clearly have an impact on the CapEx line as it stands in FY 2025.
And then, as we look at some of our business as usual capital programs, we will make decisions on those and the speed at which we execute, based upon, you know, the health and the market dynamics into which we're facing. So that's why it is such a broad range. But we are confident it will actually be managed within that range and managed to be optimum for the market into which we're selling.
Thank you, Amanda.
Our next question comes from Regan Burrows, from Bell Potter. Please go ahead with your question.
Hi, Amanda and team. Thanks for taking my question. I guess you mentioned obviously on the 35-year reserve life, that sort of implies a 7,200-ton per annum run rate for NdPr currently. And you mentioned production this coming financial year will be weighted to the second half. I mean, that's still a 27% increase year on year. I guess, are you comfortable that the market's gonna sort of recover to a sufficient level by the beginning of calendar year 2025? And if it doesn't, what's the thinking?
Well, we never set a path and then bullishly go down that path no matter what else happens around us. So of course, we will accommodate what happens with the market. As I said, though, I think that we've got some signposts at present that give us a bit more confidence coming into this financial year. And not just the, you know, sort of firming of the price over the last month or so, but the new Chinese quotas, which were released last week, certainly give us more confidence that there's a drive also within China to really improve value in the market. And we are seeing an improvement in demand and a reduction in inventories at the same time.
So, we will manage, you know, it's the management task is: how do we make sure that we're operating our assets as efficiently as we can, at the same time as making sure we're not overproducing for the market? And, we think that we've got a path to do that, and we remain convicted on the underlying growth in this market. It just slowed a bit last year, and it did have a lot of supply side pressure because of the quotas in China. But we think that the market will continue to grow. We're rather expecting that it's going to be more a case of when do we accelerate production rather than when do we take our foot off the accelerator.
Great. Thanks for that. I'll pass it back.
Once again, if you would like to ask a question, please press star and one on your telephone and wait for your name to be announced. Our next question comes from Dim Ariyasinghe from UBS. Please go ahead with your question.
Thanks, Amanda and team. I think most of the questions have been asked, but I might check in with a couple of follow-ups. First on the production outlook for next year, with respect to the Chinese production quotas, is it as simple as thinking, so I think they missed estimates a couple of weeks ago, which was positive, that Lynas could produce, you know, marginally more, and then looking for the first half of next year, you know, can we go and, you know, if they underproduce again or miss market expectations, can we almost take that and give that to Lynas' share of production?
So I might let Pol have a few comments on China quotas, because you know, he's very close to them and can give you a bit more rounded perspective.
Yeah. What is interesting is to see the modest increase in mining and production, especially production quotas in China.
... The other factor that is not under control at the moment, it's production of rare earths from imported ore. That quantity is substantial and doesn't help the price. But at the same time, you saw the imports from Myanmar decreasing because at the current price level, there was no way for the mining company to find a deal that was acceptable to the separator in China. So that makes price quite volatile, because from one quarter to another, one month to another, the volume changed quite a lot. I expect that to be better organized in the near future, so that we would have a more steady market. But Amanda says, I know China well, but I'm not the Chinese administration.
Yeah, I guess, is it like a case that if they underperform again or miss next year, that you guys can ramp up quickly into the second half of FY 2025?
Yes, that is our objective, is that, I think that what you will see this year is that the second half production is a step up from the first half production. And we expect that that will be aligned to market demand.
Yeah, cool. Okay. Thank you.
And-
Okay.
In showing-
Sorry.
No further questions at this time. I'd like to turn the floor back over to Ms. Lacaze for closing remarks.
Thank you. Yes, well, aren't we doing well? We're going to be done in the hour, which I think may be a record. Thank you for your questions. We will take them on board and, you know, really look at what are the opportunities to enhance people's understanding. I particularly recognize the question around the operating costs and whether we and we will work through that because it is and you can see from the slide that I've left on the screen here, it is our number one objective to make sure that we continue to not just be low cost, but to continue to improve our cost position. It is also really important to recognize that that is not just about input costs, but it is really about the way that we operate our assets.
You know, the biggest kick, I think, that we've had this year is recovery improvement, and the second is selections being more selective in what we actually produce. Mount Weld continues to give us this fabulous foundation. It is a low-cost operation because it's high grade and, you know, that cannot be reproduced elsewhere. The geology is as the geology is, so we look forward to actually, I think, a good year this year. And being a perpetual optimist, certainly, you know, Pol has a great saying, is that, "Today, we're much better than yesterday, and much worse than tomorrow," so our objective is to ensure that tomorrow, and that this year continues to see us improve our performance.
So once again, thanks very much, and I'm sure that the team will follow up with some more detail on some of those areas that people have asked questions.
Ladies and gentlemen, that does conclude our conference for today. We thank you for participating. You may now disconnect your lines.