Good morning, ladies and gentlemen. I'm John Humphrey, Chair of the Board of Lynas Rare Earths, and I'm pleased to welcome you to this annual general meeting of the company. I'd like to begin by acknowledging the traditional owners of the land upon which we meet, the Gadigal of the Eora Nation, as well as the traditional owners of lands on which we live, work, and meet in the Eastern Goldfields of Western Australia. We pay our respects to elders past and present, and extend that respect to any Aboriginal and Torres Strait Islander people attending the meeting today. I'd like to extend a warm welcome to all shareholders joining us today, both in person and online. Ladies and gentlemen, today's AGM is being filmed, and it is being live-streamed via the internet. Details are available on the Lynas website.
When we come to the Q&A section of the AGM, we will take written and audio questions from shareholders joining us online, as well as questions from shareholders in the room. Online attendees can submit questions via the Lumi platform at any time. Voting today will be conducted by way of a poll on all items of business. Online voting will shortly open for all resolutions. At that time, if you're eligible to vote at this meeting, a new voting tab will appear. 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. You do not need to hit Submit or Enter, as the vote is automatically recorded. However, you have the ability to change your vote up until the time I declare that voting is closed.
I now declare voting open on all items of business. The voting tab will soon appear, and I will provide notice before I move to close voting at the end of this meeting. For information on how to submit a question or vote, please refer to the Lumi platform user guide on our website or in the document tab of the Lumi webcast platform. I would now like to introduce my fellow directors. Joining me here today are our Chief Executive Officer and Managing Director, Amanda Lacaze, and non-executive directors, John Beevers, Philippe Etienne, Vanessa Guthrie, and Grant Murdoch. We are also pleased to be joined by Sarah Leonard, General Counsel and Company Secretary, and our audit firm, Ernst & Young, is represented by Trevor Hammond, Partner, who is also here in the room with us today.
Trevor, I understand that all shareholders present have registered with our share registry Boardroom before the meeting. The notice of meeting was dispatched to all shareholders on 11 October 2024, and accordingly, this meeting is deemed to have been properly convened. We have a quorum of more than two shareholders, and accordingly, this meeting is able to transact the formal business as set out in the notice of meeting. Before we proceed with the formal business of the meeting, I will deliver a short address, after which Amanda Lacaze will deliver the CEO presentation. We will then table the FY24 financial statements. At that point, we will pause for any questions on Amanda's presentation and the financial statements, and after questions, we will continue with the formal business of the meeting. There will be an opportunity for shareholders to ask questions on specific resolutions. I'm delighted to address you today.
This is my first address as Chair of the Lynas Rare Earths Board, although I've served on the board as a non-executive director since 2017. In the 2024 financial year, your company delivered a positive financial performance despite challenging external market conditions. This is a credit to the entire team, and they're focused on cost control and efficiency. Significant progress was made on key growth initiatives during the year, positioning the company to benefit from future market improvements and deliver long-term shareholder value. Reflecting the challenging market conditions, sales revenue for the year was AUD 463.3 million, and net profit after tax achieved was AUD 84.5 million. While NdPr production decreased by 8% year on year, this was due in large part to the six-week temporary shutdown at Lynas Malaysia while capacity upgrade works were undertaken.
Pleasingly, total costs reduced by 17% year on year, demonstrating the company's strong financial discipline and steadfast focus on delivering process efficiencies and improved recoveries across all operations. During the year, the average China domestic price of NdPr, VAT excluded, decreased from $60.4 a kilogram in June 2023 to $44 per kilogram in June 2024, which is quite a significant decrease. There have been some positive movements in the NdPr market price in recent months. However, it is Lynas's view that prices are likely to remain volatile until there is a strengthening in the Chinese economy. Turning to operations, the variation to the terms of the Malaysian operating license announced in October 2023 was a significant achievement for Lynas. This variation has enabled the continuation of cracking and leaching in Malaysia and provides confidence for further investment.
This investment includes the capacity upgrade works completed at Lynas Malaysia in the December 2023 quarter. It also includes the reconfiguration of a circuit to deliver Malaysia's first production of two heavy rare earth products, dysprosium and terbium, in the 2025 calendar year. In Western Australia, commissioning was completed for our new Kalgoorlie Rare Earths processing facility, and production commenced in the June 2024 quarter. This milestone was achieved as a result of excellent collaboration between our Australian and Malaysian teams. Pleasingly, we continue to have a number of our Malaysian experts working on site in Kalgoorlie to share their expertise. The mixed rare earth carbonate produced in Kalgoorlie, we call it MREC, is shipped to Lynas Malaysia for further processing. Recently, I was proud to join Amanda, our Kalgoorlie team, and the Australian Resources Minister, the Honourable Madeleine King, MP, to officially open the Kalgoorlie Rare Earths processing facility.
Amanda will share some photos of the ceremony in her CEO presentation. At Mount Weld, key achievements included the successful completion of the exploration drilling program. We also commenced a new mining program and completed construction for Stage One Concentrate dewatering of the Mount Weld expansion project. Stage Two, Balance of Plant, is in progress and forecast to be completed by the end of financial year 2025. It will be progressively commissioned. Following year-end, on 5 August 2024, the 2024 Mount Weld mineral resource and ore reserve update was released. This update is the result of extensive drilling and resulted in a 92% increase in mineral resources and a 63% increase in Mount Weld ore reserves. Importantly for shareholders, the updated mineral ore reserve includes a 92% increase in contained dysprosium.
Dysprosium and terbium are essential for high-performance rare earth permanent magnets used in electric vehicles and essential for high-tech electronics. Also, at Mount Weld in July this year, contracts were signed with Zenith Energy for the supply of power from a gas-firmed hybrid renewable power station. The new power station will include wind, solar, and battery storage and is a key initiative to reduce our greenhouse gas emissions intensity. Early works for the new power station commenced in financial year 2024. Once fully operational, the hybrid power station is forecast to reduce greenhouse gas emissions by approximately 60,000 tons of CO2 equivalent per year compared to a diesel-only power station of equivalent size. As you can see in the presentation, we have also installed a rooftop solar array at Lynas Malaysia to provide a renewable energy supply.
This summary of our key growth initiatives in financial year 2024 demonstrates our commitment to growing our footprint and production capacity and making the most of the world-class Mount Weld resource. Lynas holds an important position in global manufacturing supply chains as an ethical and responsible rare earths producer, and we take this responsibility seriously. This includes making a positive contribution to our communities through local employment and supplier opportunities and community volunteering and investment. We are pleased to provide transparent reporting on Lynas' environmental, social, and governance performance in the annual ESG report. The report is on our website, lynasrareearths.com, and if you haven't already read the report, I encourage you to do so and welcome your feedback. From a capital management perspective, the board continues to consider capital management plans, including the potential for a dividend.
To date, given the capital investment required for growth initiatives, the board has decided that capital is best used for reinvestment in growth projects. The board is working to develop a dividend policy appropriate for a growth company like Lynas. In terms of board composition, the board continues to plan for director succession and renewal. We expect to appoint one or two additional directors over the coming year, and we will update you when these appointments are made. In closing, on behalf of the board, I would like to thank Amanda Lacaze and the executive team for their leadership this year. I also thank the entire Lynas team for their contribution to Lynas' success in 2024, and lastly, the board would also like to thank you, our shareholders, for your continued support, and I would now like to invite Amanda to address the meeting.
Good morning, everybody.
You know, this is one of my very favorite days of the year. It's not quite up there with Christmas, but it's way ahead of birthdays, which now are just a reminder of my impending mortality. But it is great. It is a favorite day because it's a terrific opportunity to see people, some of whom now, you know, I've known for 10 years. And this year was my 10th anniversary at Lynas. It was really quite a lot of fun. We have every year service awards, and I said, well, I get to make the valedictory speech for the class of 2014. In 2014, the company was not really in such good shape. And I did say that we were either all very brave or very foolish. As it turns out, it's been a great 10 years.
For those of you who have been here every year since I joined, it's just wonderful to see you again. Many of you have met my husband, Wayne, who also sends his very best regards. He cannot be here today, not only because he's on a golf course. He is in a different state. John has covered the FY24 highlights comprehensively. It was a good year insofar as we delivered a profitable outcome, notwithstanding a very difficult market. It was a very good year in terms of the continued development of our business. As we approach calendar year 2025, I thought I would use my time today to provide a detailed update on Lynas 2025. Many of you will recall that in May 2019, and some of you were at our Investor Day, we set a vision for 2025 and a pathway to get there.
I think we sketched out a pathway. It was an ambitious plan for a company that at the time was under regulatory pressure in Malaysia and the subject of a hostile takeover bid. It was a very ambitious plan from a company that was moderately profitable in a challenging market. In 2019, we had reached nameplate at our two facilities, and we had remediated our balance sheet, which still sticks sharply in my mind, the description of us as a debt-ridden basket case. By that stage, we were no longer described as such. We were and still are believers that to stand still is to go backwards. We set ourselves the Lynas 2025 target.
Our ambition was and remains founded in our belief that the market will grow strongly as the materials we produce are essential to the products we want to use every day and to the technologies that are essential as the world seeks to decarbonize. Our ambitious plan started with an intent to create a larger business to grow our capacity to at least 10,500 tons per annum of NdPr. That objective brought with it a series of complex projects, and even the most casual observer will know that bringing projects to life in mining and manufacturing can be difficult and is always challenging. That same casual observer of the mining industry will know how many projects never find their way off the spreadsheet and into reality. And at a time when many projects have failed to launch from the spreadsheet, I think our achievements are manifest.
Other key objectives which we set for ourselves included diversifying our industrial footprint, thus improving business resilience, continuing to build our product portfolio to ensure we could meet our customers' needs, ensuring we were strong and competitive and able to succeed through the cycle and investing wisely for growth. As we head towards the end of financial year 2025, I can tell you that we are very proud of the projects we have delivered since we first set that vision, and I will cover some of those elements today. Over the past six years, we've used our balance sheet to invest in key projects in Australia and Malaysia. The first, and in some ways, some people might say most important, was our exploration program at Mount Weld.
Undertaken in conjunction with and partially funded by JARE, the results of this program demonstrate the remarkable nature of the Mount Weld ore body, which forms the foundation for all that we do. Without this, without the feedstock, no matter how clever our processing facilities, it would be moot. So after 10 years, we were able to record a 92% increase in resources, 63% increase in reserves, 46% increase in total rare earth oxides, and a 92% increase in contained dysprosium and terbium. This means we have a 35-year mine life at current capacity and more than 20 years at the expanded capacity. This updated statement does not include the fresh carbonatite. It's based on 84,000 meters of drilling in the saprolite zone down to 200 meters. This has significantly enhanced our understanding of the Mount Weld ore body.
It's also enhanced our understanding of the mineralogy, which is important as we think about how we process these materials. 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 Mount Weld rare earth ore reserves are now 32 million tons at 6.4% total rare earth oxides for 2 million tons of contained total rare earth oxide. I will leave it to you, if you feel like it, to make comparisons to other published resource and reserve statements.
When you do, I think you will find it 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 ore reserves. The increase also reflects a reduction in cutoff grade based on our proven processing capability and the introduction of the new DyTb circuit in Malaysia. We have now included the ability to process our tailings, which grade at 7.6% in the ore reserves, based on the new processing capability offered by the Mount Weld expansion program, specifically the fine grinding circuit. We've had this goal for some years, and we've pretty carefully managed our tailings to allow us to recover them.
In the mining world, I think this resource and reserve update is a cracking read. I would recommend it to anyone who has even a passing interest in geology and mining, even if we all know the ending, which is Mount Weld wins again. Our Mount Weld mine site looks very different today from what it looked like in 2019. The Mount Weld expansion project is heading into the home straight. Stage one is complete, commissioned, and integrated into operations, and stage two is well underway. Just look at the difference on site. You can see from this where the 2019 footprint was and now the new footprint as we expand our operations. This, I know for some would just look like mounds of red dirt, but for our mineralogists, it's very exciting. This is the first concentrate which has come out of the new dewatering circuit.
The stage two progress, which really allows us to be much more efficient processors of this material, as well as including a number of environmental benefits, is well underway. The transformation is the work of many people with key leadership from our project director, Alex Logan.
I'm Alex Logan. I'm the project director for the Mount Weld expansion. I've been at Lynas for 12 years now. The project itself is a AUD 570 million expansion of Mount Weld and a significant expansion in capacity at Mount Weld, both from a throughput perspective as well as some of the sustainability initiatives that we've implemented as part of this project. One of the big challenges we've had on the Mount Weld expansion has been ensuring that the construction and commissioning of the project has minimal impact on the existing operation.
We are essentially building this big new plant on top of and around the existing operation, all of that while requiring the existing plant to keep running and producing concentrate feedstocks for both LAMP and ramp up Kalgoorlie. One of the things we're doing differently on this project is a big step up in concentrate dewatering capacity. We've got new filter circuits that will de-bottleneck the existing operation, which are in operation right now. Those circuits will certainly allow a big step change in processing capacity at Mount Weld. I'm most proud of the sense of ownership that our owners team has had on the project. There's an immense sense of personal accountability demonstrated, and that's ownership of safety culture and managing the money like it's coming out of their own pockets. We have a really great team with a suite of complementary skill sets.
They're fully committed to delivering a great outcome for our people and our shareholders. And we're really seeing the benefits of that in the delivery of this project.
Thank you. And I will let Alex know that he got applause. He deserves it. He is a remarkable young man who has really stepped up and provided exceptional leadership on this project. And every one of us on the board and the leadership team is really proud of what's been achieved. Lynas Malaysia also looks different from what it did in 2019. As we look at this, we can see that we've got a number of new installations. Up in the top left-hand corner, Jen tells me I can point at things, is our new PDF. Over here is the new Mixed Rare Earth Carbonate receival facility.
Down here, and you know if I press the button, the labels would be there. There's a thought. I wouldn't have to tell you. Nonetheless, we have the new—this is one that I'm quite excited to see be up in Malaysia in a couple of weeks' time, which is the new building associated with product finishing, including with our new heavy rare earth segment. Our Executive General Manager in Malaysia is Amir Hakim. Amir has actually been with the company for, I think, 15 years now, and he is accountable for our operations in Malaysia and Kalgoorlie. He is an absolutely key member of our operations team, and he has been instrumental in leading much of the business improvement activities over the past five years. That was the introduction for him.
But I wanted to show you this as well, because this is one of Paul's pride and joy, is the robot arm that we've now got in product finishing. This is all part of ensuring that we are providing a safe environment and eliminating risks for our people.
Hi, my name is Amir Hakim. I'm an Executive General Manager at Lynas Malaysia, working with Lynas since 2011. My role in Lynas 2025 is to construct a new facility to increase capacity, plus terbium and dysprosium, the first outside China. What makes Lynas 2025 stand out is because we are competitive in terms of OPEX and also CapEx when building a new construction. The team has been able to become creative when designing the project Lynas 2025 to get maximizing our asset built in 2011 and 2014.
I'm really proud of Lynas team because they are really creative, work together as a teamwork and decision-making to resolve the issue during the project. I am also very proud of the safety performance in Lynas Malaysia, with more than 600 subcontractors on site for six weeks with high-intense work during construction and also modification without any lost-time injury record. Now we are focused on getting the process in good condition after MREC load into the system, stay resilient on operation expenditure from mines into the big bag of the product.
Thank you. He deserves it. And it would be remiss of me not to also acknowledge Pol Le Roux, who is here as Chief Operating Officer, who has provided leadership across, particularly in Malaysia, and Chris Jennings, who led our major projects team through the year.
However, I would say that I don't think I have ever seen Amir with such a clean jacket. I suspect it must have come straight out of the packet because he looks like he stepped straight out of the band box, and I can tell you that that is not the way that Amir normally looks. Our second objective was to diversify our industrial footprint. Front and centre was to de-risk our geographic concentration in Malaysia, which at the time, in 2019, some of you will remember, was somewhat problematic. I'm pleased to report that we have a much more positive relationship with government and regulators in Malaysia now, with a significant recognition of the importance that the rare earths industry can provide in the Malaysian economy. The new Kalgoorlie facility partially addresses the issue of diversifying the industrial footprint.
And we also, at the time, added the objective to establish a plant in the U.S. This was the Lynas Kalgoorlie site in 2022. And this is the site today. It is really quite extraordinary what has been achieved here. And as John said, we were delighted to welcome the Resources Minister for the official opening just over a week or so ago. And you know what really gave me the greatest joy was instead of having a boring plaque, our team there came up with themselves, right? It wasn't even clever Jen and Lauren, who do all sorts of clever things in terms of communications.
The team said, well, why don't we actually create what I would call a sculpture, which is they took the Super bag, which is what feeds the concentrate into the kiln, and they actually constructed a miniature version of that, on which we now have the plaque, which actually commemorates the opening. So it's really, really a lot of fun. So just having a little fun.
Hi, I'm Matthew Lane. I'm the operations manager for the new Kalgoorlie rare earths processing facility. This processing facility is part of the Lynas 2025 initiative. It provides downstream value-adding processing from the Mount Weld concentrate here in Western Australia. One of the challenges for this project was the compressed time frame to get the plant up and running.
We had license approval from February 2022, and basically were able to work through that through construction, through commissioning, through operational readiness to produce our first MREC in June of this year, 2024. Some of the improvements that we've made here at Kalgoorlie, the catch-on learnings from LAMP and other operations, includes improved utilization of our labor workforce by increasing the materials handling. We've introduced the Rotainer system instead of using bags to load the concentrate from Mount Weld into our system here, which enables bulk handling with excellent dust control and emissions control. And likewise, at the end of our process with our MREC handling and the container tilter system, we're filling by sea container instead of by bags, which brings with it greater cost efficiencies. I think the biggest achievement for Kalgoorlie really is the achievement itself, basically getting the plant up and running.
To go from nothing to an operating plant that is compliant within two and a half years, it takes your breath away in terms of the level of achievement that we've done. So to put all that together and start with nothing to be where we are here today, up and running with a trained workforce is phenomenal. So it's all about achieving a ramp up now.
Matthew's comments, and indeed the comments from all three of our projects team, reflect the pride that everybody in the business has on what we have been able to achieve. We do always strive to continuously improve. We would say that at this time, we're maybe on generation four, cracking and leaching design, and indeed solvent extraction, and we continuously improve and consider ways to improve our flow sheets, certainly safety.
One of the things that gives me great joy at both Mount Weld and Kalgoorlie is our fully automated filter press systems, where we have had a number of injuries over time, and these facilities, I think, as Matthew rightly said, simply do take your breath away. And I thank everybody on the teams. We do not yet have our plant in the U.S. The pathway to success there has been a little more complex. Our goal there has been to undertake that expansion in a way that does not risk our balance sheet, and so therefore, a lot of the work that we have done with the U.S. government via the Department of Defense has been critical to doing so. We have worked very effectively with the USG, and as I think everybody knows, have a funded project, which we're now looking to accelerate.
Our third objective was to be a supplier of choice to strategic customers. Part of that is making sure that our product range is fit for their needs and for the market. So dysprosium and terbium, for example, are critical inputs for magnets. We will be the first to separate these outside China when the new Lynas Malaysia circuit comes into operation in the first half of next calendar year. And we will be able to feed that circuit with the Mount Weld feedstock because we now understand the mineralogy of the ore body better. Pol and his team are very focused on improving recoveries of those heavies that has not actually been a key focus for us up until now. Our business is a technology business, and today we are and continue to invest in continuously improving our processes and continuously improving our product range.
Here's a little secret. It's not always about magnets. There are actually 15 rare earth elements, and we have most of those in the Mount Weld ore body. As we extract those, it is incumbent on us to find best possible and productive uses for those materials. As well as that, as we think about this, magnets are actually quite mature technology, even though there is still a lot of growth in the market. There are a number of other sectors which are significant. We see will be significant growth opportunities in the future, including new energy fuels, for example. Working with our research and development team to develop new catalysts that can be used in production of hydrogen, say, for example, is a key part of our R&D focus today.
However, even with all these plans, we still have to accept that we are not always in control of the market in which we operate. We can complain about that. There are some who are quite good at whinging about the dynamics of the rare earths market, or we can identify what it takes to be successful in the market and focus on delivering those key success factors, and frankly, as the market goes through its price cycles, it is critically important that we are able to be successful when the price is low and very successful when the price is high, and how are we successful when the price is low? It's all about cost and efficiency.
Based on published results, we're one of only two rare earths firms in the world that was able to make a profit in the first six months of this year, even, but certainly in the last financial year, and that is because of our unrelenting focus on cost and efficiency. I know many of you have heard me talk about this before, but our cost is our muscle, and that is an important, it's important to show that in a market where our competition responds to strength, not weakness. We have been careful with your money. You can see from our photos the achievements which have been funded by a combination of operating cash flow, equity funding, and government support. The market is soft right now in terms of pricing, but demand will grow and pricing will follow.
And we are very well placed to respond to continued demand growth in the future. Lynas 2025 has made us future fit. Our job, the leadership of this company, is to make sure that we now operate these assets in which we have invested efficiently to deliver enhanced returns for you as shareholders and other stakeholders in the business. So with that, I will hand back to John, who is going to moderate the question session.
Thanks, Amanda. What a great presentation. And you'll see from that fairly graphically what shareholders' money has been spent on. So now coming to the formal part of the meeting, I will now table the financial statements of the company for the year ended 30 June 2024, consisting of the annual financial report, the director's report, and the auditor's report.
The annual report was dispatched with the notice of this meeting to those shareholders who requested a hard copy, and an electronic copy was sent by email to shareholders with an email address and made available on the ASX website and the company's website. We would now like to ask for a question on Amanda's presentation and the financial statements. A reminder that only shareholders, proxy holders, and authorized representatives can ask questions. To ensure that there is an opportunity for everyone to ask questions, there will be a limit of two questions per shareholder during each Q&A session. Proxy holders, please state your name and that you are a proxy holder. Shareholders joining online can ask a question by selecting the messaging tab at the top of the Lumi platform. For more information on how to ask a question, please refer to the documents tab on the webcast.
For shareholders in the room who would like to ask a question, please form a queue behind the microphone at the front of the room. Okay. Are there any questions?
Hello. Do you want me to ask a question now?
Yeah.
Sorry. It's Julianne Mills from the Australian Shareholders Association. I'm here representing 300 proxies for retail shareholders worth AUD 6.4 million on today's price. Just a quick question around the U.S. plant and the political situation in the U.S. I just wondered if you could give us a bit more color around what that situation is.
Thanks. Thanks, Julianne. I might throw to Amanda to respond to that question.
I thought you could do that one. Our engagement with the U.S. government occurred under the first Trump presidency.
President Trump, President-elect Trump, actually, one of the things that he did very effectively in his first presidency was to align both sides of the House on matters relating to China. And of course, the Make America Great Again philosophy is about reassuring manufacturing and bringing manufacturing jobs home and increasing the independence of the U.S. Now, whether the mechanisms by which he purports to do those seem to make sense to us right today or not, I can actually say that through this process, the way that it's been executed by the various agencies within Washington is eminently sensible. So we commenced that engagement under President Trump's presidency. We continued it under the Biden administration. We would expect that the continued investment and development of onshoring in the U.S. will continue. And notwithstanding everything, I still would not bet against the Americans.
Okay. Thank you.
Shall I come back or ask another question?
You can come back and ask another question. Yep. Chris Bevan, representing the Kupolani Superannuation Fund.
My question is, what, if any, plans does the board have to eventually move beyond the production of oxides so that the company ceases to be effectively a price taker set by the Chinese government and the state of the Chinese economy and cease to have what was eloquently explained by the Managing Director to be the ups and downs of trading in a global commodity or series of global commodities so that the company eventually moves to doing what China does, which is enter into bespoke agreements with companies globally, primarily in Europe and North America, for the sale of high-temperature permanent magnets.
Amanda?
Is an excellent question.
As we come to the end of Lynas 2025, we are faced with sort of some thinking that we're doing at present. I guess the beginning is, can we find a better title than Lynas 2030? No, what is the next stage of growth, and how does it also go to improving resilience of our business? There are some varying pathways that we could choose to be able to do that. Getting bigger is one because it means you have more influence within the market.
Increasing the product range and being able to engage with customers, whether it is more processed material or whether, for example, it's just the addition of DyTb and the fact that that allows us to have a different negotiation with customers who are seeking to, say, buy that in conjunction with their NdPr, or whether it is actually moving into the value-added area. So we are doing the work on that at present, and we will model it and come up with what is going to give us the best possible financial outcome as a result of that. But you are right. Our next task is how do we really execute on strategies which are going to assist us to change the dynamics of the market?
Does that rely on support from the Japanese government?
Not necessarily.
Japanese magnet makers are the only magnet makers of scale other than the Chinese magnet makers. So it's not necessarily that the Japanese government would necessarily be focused on doing this, but there are certainly governments outside China, in addition to the Japanese government, who may be interested in a strategy of that sort.
Thank you.
Hello, again. Sorry. Look, this is just a general question around sulfuric acid and the importance of that within the business and the ramifications for the closure of the nickel mine.
Are you going to give me that one?
Amanda, I'll give you that one too.
He is so very generous, isn't he? Sulfuric acid is critical for our business. So the mechanism by which we crack our material is the addition of temperature and sulfuric acid.
Yes, one of the reasons for one of the supporting factors for choosing Kalgoorlie was the proximity to the nickel smelter and therefore to a local source of sulfuric acid. BHP's decision to shut that, the smelter, is disappointing for a whole variety of reasons, including all of the people whose jobs have been affected, and we recognize that. But we cannot be too sentimental about that because it is also critical for our business. We think that we have worked with BHP, and we have worked independently to identify alternate supply sources. We have those in place, and we have the logistics which will get the product to Kalgoorlie. That's critically important that we get that as a short-term solution, and we are looking at other medium and longer-term solutions because we are a significant user of acid, and supply proximal to the plant is quite important.
So will that increase the cost of production, do you think?
There'll be some cost penalty associated with it, but frankly, in terms of as we look at this and we look at what's the final effect on the cost per kilo of NdPr in a big bag in Malaysia, it's not significant, particularly in this year. But that's one of the reasons why we're looking at the medium and long-term solutions because as we ramp up Kalgoorlie more, then it has the potential to have more effect.
Great. Thank you very much.
Thank you.
The young lady just asked my question. And you got an excellent answer. Thank you. My name's Chris. I'm representing my own super fund and family. The U.S., any further insight into the U.S. after you've answered your first question? Like timelines, are we still going to aim for the U.S. budget that they've allocated?
I know they're funding it DoD, but is it going to be within their budget?
We've still got the same contract with the same funding. There's been no increase in the funding limit. On timing, we've made an announcement in the quarterly that we're having some permitting issues on the site at Seadrift, and those issues will take time to resolve. We aren't in control of the timing. And at this stage, we're trying to negotiate the time. But in terms of your question on the funding envelope, the funding envelope remains the same.
Thank you very much.
I'll just add to that. We're working very—we have a very productive relationship with the team in the DoD whose job it is to execute on this project. In fact, a number of us spent two weeks in Washington just recently.
There is no step back from them in terms of the commitment to this project being complete, and they are working very productively and collaboratively with us to be able to find a way through. We have made no bones about the fact that, look what we've been able to do in five years elsewhere. Let's work together to get this sorted.
Thank you, Amanda. Thank you.
Thank you.
Robert Richardson, representing my family superannuation fund. Really impressed, obviously, with the incredible expansion that we've heard about this morning. My question relates to the restoration and rehabilitation in Appendix D5 in the accounts. I note that the provisions made during the year have gone from AUD 31 million to AUD 127 million in the last year. Obviously, this would relate to the large expansion in operations, but that increase of over 100% in a year worries me a little bit.
What proportion of that is coming from Malaysia, and is this another way of the Malaysians really getting into the shareholders' potential for profit?
I think the answer is that most of the increase in the provision has come from Malaysia. But I might ask our CFO, Gaudenz Sturzenegger, who's with us today, to respond to the question.
Yeah, thank you.
Gaudenz. Just give you a mic.
Okay. Can you hear me?
Yep.
Okay. So the increase was really due to NUF, so not the radioactive material where we have the PDF presented or seen on the photo. It basically has to do with the NUF, which was accumulated over the years. The plan, what we worked on, was to be able to move it out or sell it or commercializing it.
And I think at the end, we have seen basically that from a cost point of view, it's kind of the more productive or the best approach to be able to also find kind of a third party who would put it in a deposit, so no permanent storage. And that's basically the adding up of the cost which it would take to move the whole product out. And here we talk about five years, so actually 10 years of cost. And we will kind of expand over the next or as fast as we can move it into that setup.
Thank you, Gaudenz. So do you see that figure increasing significantly in the future? Hopefully not at the rate of.
No, it should not. On a per-unit basis, it's not. It's just basically the accumulated material over the last 10 years.
That's why you have this relatively big figure, but it will work itself down over the next couple of years.
Thank you.
So that's a background. It will unwind. Yeah, yeah, exactly. Everyone's clear. We expense it over the years. We're moving it out. It's the cost we pay to the third party.
So. Jen, do we have any electronic questions?
Yes, Chair. We have three questions online. The first question is from Stephen Mayne. It states on page 113 of the annual report, we've listed eight substantial shareholders who own more than 5% of our company, but they're not ranked according to size. AustralianSuper is included twice, and you haven't included percentage figures. Please fix this in next year's annual report. And could the CEO also comment on the level of engagement she's had with Gina Rinehart, one of our newest substantial shareholders?
Are the press reports correct that she is trying to engineer a merger with New York-listed MP Materials, where she is also a substantial shareholder?
Well, I think the question from Stephen Mayne is based on an assumption, which is incorrect. And I don't propose to ask the CEO to comment on the interactions that she's had with one of our large shareholders, Mrs. Rinehart. So can we move to the next question?
The second question also comes from Mr. Stephen Mayne. It says, "Ernst & Young have been our external auditor for more than 20 years. Over that period, how many times have we run a full competitive tender for our audit work, and when are we next planning to tender our external audit work? Also, how extensive is our internal audit program, and which firms, apart from Ernst & Young, assist with delivering this program?"
Okay.
There are a number of sub-questions in Mr. Mayne's question. I don't know how many times we've run a full competitive process in relation to the tendering of the audit. What I can say in relation to the audit is that the audit committee turns its mind to the question of the appointment of an appropriate auditor on a regular basis. In terms of when might there be another competitive tender process, that's a matter that the audit committee will continue to address on a regular basis as part of its remit. And I don't have any further comment beyond that.
Chair, we have one final question for this item from G&J Rogers Investments. It states, "I read somewhere about breakthrough discovery in acid-free processing. I may be wrong.
Is there any future benefit to Lynas, or will it make others more competitive against us?"
Amanda, I might refer that.
I might let Pol address that question.
So is there any research interesting in processing rare earths? Yes. Is it acid-free or otherwise? Both. Are we working on it? Yes. And it's too early to explain what, but definitely what I can tell you is in 10 years' time, there will continue to be a lot of changes in our way of processing our rare earths, and it's too early to discuss that at the moment.
Are there any further questions? Are there any further electronic questions being received yet?
No, Chair, there are not.
Thank you. As there are no further questions at this stage, we will proceed with the formal business of the meeting.
Attendees in the room will have received one of the following cards upon registration: blue, which is for voting shareholders, orange, non-voting shareholders, and white, guests. Each resolution will be discussed and then voted on by way of a poll. Details of the proxies received for each resolution will be shown on the screen prior to each resolution being put to the meeting. As stated on the proxy form, I will vote undirected proxies in favour of each resolution. Each shareholder who is present in person and who is eligible to vote at today's meeting will have received a blue-coloured voting card from the registration desk. At the conclusion of the meeting, representatives of Boardroom will collect the completed voting cards from each shareholder. The notice of meeting having been distributed to all shareholders will be taken as read.
After each resolution is tabled, I will ask for questions from shareholders online and shareholders in the room. Resolution 1 seeks approval of the 2024 remuneration report, which is set out in the company's annual report. The remuneration report set out in specific details of the company's remuneration framework during the year ended 30 June 2024. Proxies received for Resolution 1 regarding the remuneration report are now shown on the screen. Are there any questions on the resolution?
Hello, it's Julianne Mills from the Australian Shareholders Association again. Just one question. It's about a minimum shareholding requirement. We note that many of your directors do actually have a reasonable percentage of shares. But the ASA prefers to have a policy around this, and we'd like to see that or have you have some comment on that, please.
Thanks, Julianne. Actually, we discussed this yesterday.
We're aware of the fact that we don't have a minimum shareholding requirement. We're aware of the Shareholders Association's wishes in respect of that, and we will discuss at an early board meeting the implementation of a minimum shareholding requirement.
Thank you. Can I ask one more question?
Sure.
It's just in regard to Mrs. Lacaze's sale of shares in November. Do you have a policy around the share sales as well?
We don't have a policy as such, but as you'll appreciate, there are fairly strict legal requirements that relate to the sale of shares by any director. And so those restrictions mean that shares can only be bought and sold during very limited periods, and Amanda, for personal reasons, saw fit to dispose of some shares.
The answer is no, we don't have a policy, but we're very careful in the strict observation of the restrictions, which are fairly significant on directors' abilities to buy and sell shares.
It did seem like a rather large amount, so would there be any kind of can you give us some rationale for that? Because yes.
Are you happy to do that? Yeah.
I'm very happy to explain it. Thanks. I've been very fortunate that the shares that I was granted in 2014, 2015, and 2016 have significantly appreciated in value. I made no sales whatsoever of shares, I think, through all of those years. Unfortunately, the tax office does not have the same view that others do and continues to come for tax payments no matter what. The shares were sold to satisfy tax liabilities.
Okay. Thank you very much.
Jen, are there any questions that have been submitted electronically?
No, Chair. No.
I'll now put the resolution to the meeting for voting by way of a poll. The text of Resolution 1 is shown on the screen, and now we'll move to Resolution 2. Resolution 2 relates to the re-election of Philippe Etienne. The board values Philippe's contribution and experience, and the board members other than Philippe support the re-election of Philippe to the board. Details of Philippe's background and experience are set out in the explanatory memorandum and on the screen. Proxies for the resolution are also shown on the screen, and I would now invite Philippe to briefly address the meeting.
Thank you, John. Good morning, fellow shareholders. It's my great honor today to offer myself for re-election to your board.
I joined the Lynas board at the start of 2015 and have now served three terms in that role and also as chair of the Health, Safety, and Environment Committee and a member of the Audit Committee. I don't need to tell our longer-holding shareholders how much the company has changed for the better over that time, and while the greatest credit undoubtedly goes to Amanda and the Lynas team, I am proud of the role that your board has played delivering it. I'm an experienced ASX director, chair of Cleanaway Waste Management Limited, and a non-executive director of Aristocrat Leisure Limited. I also serve as chair of Quantem, which is a large unlisted infrastructure company in the bulk liquids logistics space. Most of my executive life was with ICI Australia, which became Orica.
Over that time, I held numerous senior positions with the chemicals and the explosives divisions, including global head of manufacturing and supply chain, global head of strategy, managing director of Europe, Middle East, and Africa, and global CEO of the Orica Mining Services Group. All of this saw me living in Australia, in the USA, and in Germany with responsibility for many billions of dollars' worth of assets operating in highly challenging markets across more than 160 countries. Finally, before moving to non-executive life, I spent four years returning Securency to financial and reputational strength following very serious bribery and corruption allegations under the previous management. Some of you may remember Securency was the 50% RBA-owned company which was pioneering the Australian invented polymer banknote technology.
I believe that my deep industrial experience operating across the global marketplace, combined with a demonstrated commitment to safe and ethical operations, has enabled me to make a positive contribution to your board, and I've absolutely loved being able to do so. I'm keen and excited to continue making that contribution should you support my election today. Thank you. Thanks, John.
Thanks, Philippe. Are there any questions on the resolution? Jen, are there any electronic questions being submitted?
Yes, Chair. There's two questions from Mr. Stephen Mayne. The first question is, as the only director up for election today, could Philippe Etienne please comment on how the chair's succession has proceeded from his point of view? Could new chair John Humphrey also please comment on the biggest changes in board process delegations, reporting lines, or governance that he's implemented since taking over as chair after last year's AGM?
And could the CEO also comment as to whether John Humphrey is more or less hands-on than his predecessor, Kathleen Conlon, as chair?
Sorry, what was the first part of the question?
The first part was, could Philippe Etienne please comment on how the chair succession has proceeded from his point of view?
Absolutely delighted to do that, and thanks for the question, Stephen. I think the chair succession was well planned, orderly, unanimously supported, and very effective. Thank you. And I don't propose to answer the second part of the question because it's not relevant to the resolution to re-elect Philippe as a director. But it's lots of fun, nonetheless.
Chair, the second question.
Are there any further questions?
Yes, there's a second question from Mr. Stephen Mayne saying, "The chair said that we are looking to appoint one or two new directors in the period ahead.
Is it likely to include WA-based directors, as we don't appear to have any at the moment, even though our registered office is in Perth? Why are we holding the physical component of today's AGM in Sydney, not Perth, particularly given we've just opened the Kalgoorlie facility? Also, if Gina Rinehart requested a board seat, what is the chair's attitude to this issue? How large would her shareholding need to become before you would seriously consider giving her a board seat?
Okay. So dealing with those issues, I don't propose to comment in relation to Mrs. Rinehart. What was the first part of the question?
The first part was about— Yeah, the Perth-based director. There are a number of things that we're going to take into account in relation to the appointment of future directors. It's likely that one of those directors will be resident overseas.
Whether or not the other appointee is located in Perth will depend on the place of residence of suitably qualified candidates. In relation to the question about holding the annual general meeting in Perth, because that's where the company is headquartered, that's a matter that the board will consider in relation to the location of the AGM next year. Are there any— Sure. Thank you. Thank you for that observation. Are there any further questions?
There are no further questions, Chair.
Okay. Well, I'll now put Resolution 2 to the meeting for voting by way of a poll. The text of Resolution 2 is shown on the screen, and I'll now move to Resolution 3. Resolution 3 relates to the proposed grant of performance rights for the benefit of our CEO and Managing Director, Amanda Lacaze.
Each performance right is a right to acquire one share in the company in the future. More details regarding the performance rights that are proposed to be issued to Ms. Lacaze are set out in the explanatory memorandum. Proxies for the resolution are now shown on the screen. Are there any questions? Are there any electronic questions, Jen? There's no further questions on this item. Proxies for this resolution are now shown on the screen. I'll now put the resolution to the meeting for voting by way of a poll. The text of Resolution 3 is shown on the screen. Ladies and gentlemen, that concludes the formal business of the meeting, and there is no other business, and as there is no other business, I declare the formal part of the meeting closed.
I would now like to complete the poll process and advise that I will close the online voting system in the next couple of minutes. Please ensure that you have cast your vote on all resolutions. Those shareholders present in the room, the instructions for completing your blue voting cards are as follows. First, please write your name in the space provided at the top of the card. Second, unless you wish to vote a number of shares in one manner and a number of shares in a different manner, clearly mark one only of the boxes on the voting paper next to each of the resolutions. You may vote for or against each resolution. Please sign in the space provided at the foot of the voting card.
And finally, lodge the completed blue voting card in the ballot boxes that are available at the doors when you exit the room. Or please hand your card to a Boardroom representative. For shareholders online, voting is now closed. The results of the poll will be announced at the ASX and will be posted on the Lynas website later today. Ladies and gentlemen, thank you once again for attending at today's meeting and for your continued support of our company. That concludes today's proceedings. And for shareholders in the room today, we hope you will join us for some refreshments. Thank you.