Please be advised that today's conference is being recorded. I would now like to hand
Good morning and welcome to the Lynas Rare Earths investor briefing for the June 2025 quarter. Today’s briefing will be presented by Amanda Lacaze [CEO and Managing Director] (Lynas Rare Earths). Joining Amanda today is Gaudenz Sturzenegger [Chief Financial Officer] (Lynas Rare Earths), Sarah Leonard [General Counsel and Company Secretary] (Lynas Rare Earths), Daniel Havas [VP of Strategy and Investor Relations] (Lynas Rare Earths), and Chris Jenney [VP of Sales and Market Development] (Lynas Rare Earths). I’ll now hand over to Amanda to commence the briefing.
Good morning, everybody. I’m told that we’ve already got lots of people in the queue for questions, so I’ll keep my opening remarks relatively short. I did get some feedback from someone who felt that we never have quite enough time to cover all the questions. Having said that, I’ve been thinking a bit about some of the questions you might ask.
For those of you who are aficionados of Insiders on Sunday mornings on the ABC, you might find that I have borrowed on some of the language that the politicians often use there, which is, oh, I would not be using Insiders on Sunday morning to announce new policy, but we’ll see as we go. In terms of the questions, we are very pleased to deliver this report for the final quarter of fiscal year 2025 because it does mark the delivery of a number of—we’ve called them firsts, but certainly we’ve had a significant delivery, development, and investment program over the last five years. As we look at our business, we expect really every month to be a record month and every month to be better than the one before. Pol’s famous quote, better than yesterday and much worse than tomorrow.
We continue to be very focused on how we deliver growth in what is an excellent market in which to be participating and which we expect will continue to be a significant growth market. Of course, the first and most important, we exceeded 2,000 tonnes of production for the first time in this quarter. As I said, my conversation with our production team is that the expectation is that each month will be a record month, although I qualify that again with the fact that we’re not just going to produce for the sake of producing, but we did increase the run rate progressively as the month went on. I would like to particularly reflect on the excellent performance at Mount Weld in terms of current production.
You know, production over fiscal year 2025 built sufficient inventory that we were able to have a shot in this month, which de-risks the transition from the old plant to the new plant. I think as our General Manager there said, the old plant can now be retired. I forget the word he used, but basically with acclaim, I mean it has certainly, for really a very small facility, served us very well over the past decade. Certainly, very big news for the quarter was the first production of dysprosium oxide and terbium oxide at our new production line in Malaysia. They both came out in May and June respectively, marking the first commercial production of separated heavy rare earth for Lynas Rare Earths and the first commercial production outside China in many, many years at Mount Weld.
As we finish the Mount Weld expansion project and as noted in the report, all of the major construction is now complete, with some non-process construction ongoing. The project has been an excellent project for us and it is certainly to date working as designed, which is of course the most important thing, but also on time and on budget. The installation of the first wind turbine at Mount Weld and the completion of the solar farm are important markers as we transition from diesel-based power generation to largely renewable energy sources at Mount Weld, consistent with our position in the market as a sustainable producer of rare earths. In Malaysia, we have two important steps, which is a signing of an MOU with the Kelantan Menteri Besar Inc.
For the development of upstream rare earth deposits in Malaysia and the signing of an MOU with JSLink from Korea for the development of downstream assets in the form of a new magnet manufacturing facility, we are really pretty excited about coming to the end of the big capital build portion of our activity and the fact that we can now start to bank many of the benefits from those investments. I'm sure everybody will be keen to hear our view on some of the industry-shaping initiatives that have been announced, particularly out of the U.S. I mean, what a roller coaster we've had over the last four or five months, and I'm sure that's the same for observers of any sector at present.
With the imposition of tariffs, the imposition of export controls, the release of some of those export controls, and then leading through to some of the announcements out of the U.S. last week with respect to industry building, on balance, our view is that developing a vibrant outside-China industry will be good for everyone, for all participants, but it will be best for us because we are today the only scale producer of light rare earth and heavy rare earth. We are an efficient producer, and I think as we've seen at times over the past decade, in particular, having our assets in place and operational when the cycle turns, and we are looking at some very positive moves in terms of price right now, means that we can take full advantage of that upswing.
Of course, for us, our heavy rare earth production is key to our competitive advantage. It's important because we could certainly, on current production rates, be sold out several times over. It allows us to participate in segments where sensitivity to pricing is much lower than in some of the magnet supply chains, and it gives us an opportunity to bundle material with our NdPr and be able to meet the needs of some of our most strategic customers. I sometimes joke internally that we can be the wife rather than the mistress so we can actually provide the full suite of materials to these strategic customers. Our task now is looking at the next stage of production of heavies, and as everyone knows, we have the project in the U.S. on which work continues.
As well as that, we are looking at additional opportunities to increase output from our Malaysian facility. All in all, we see this as a pleasing end to the FY 2025 financial year and are looking forward to 2026 with a great deal of enthusiasm. With that, I think that it's a good idea to move straight on to take questions.
Thank you. As a reminder, to ask a question you need to press Star 11 on your telephone. Kindly limit your questions to one question at a time. If you have a follow up, please rejoin the queue. Our first question comes from Daniel Morgan from Barrenjoey. Please go ahead.
Hi Amanda and Tim. My first question is about pricing. Did you sell any dysprosium oxide or terbium oxide during the quarter? I noticed in the release that you mentioned selling some products without reference to China market indices. Is that specifically related to dysprosium and terbium oxide, or does it also include NdPr that you’re bundling or pricing independently of China benchmarks? Thank you .
Thanks Daniel. Yes, we have sold some NdPr. We are being very selective in some of the segments that we will now be able to participate in. There's a longer trial period, and we have samples at a number of customers, but we're pretty confident about those converting as well. We have been very cautious in the quantities that we have sold and the customers to whom we have sold those because we do have limited material at this stage. Yes, we have sold it, and yes, we have sold. We are significantly advanced in some cases and have sold to others. Bundled offerings actually see us with a different approach to pricing than has been standard in the industry for some time. I think the issue of whether we end up with two levels of pricing—I actually don't believe that there's likely to be two different pricing formats.
I think that the value comes, and we're seeing a little bit of this at present in the market price moving up to a level which is at a more sustaining level for industry development.
Thank you. I'll rejoin the queue out of respect. Thank you.
Thanks, Daniel.
Thank you for the questions. We'll move for the next question. Our next question comes from Rahul Anand from Morgan Stanley. Please go ahead.
Hi Amanda and team. Thanks for the call. For my one question, I just wanted to continue on from Daniel into the pricing. If we look at your baseload supply that's going into the JARE contract, I just wanted to go back to that, perhaps, and get a quick refresher if I can. Obviously, my understanding is that the supply rights are until 2038 for about 7,200 tonnes per year. There is a clause in that contract stating that Lynas would not be disadvantaged. I guess my question is, if you do start getting better pricing for marginal volumes outside those 7,200 tonnes for your NdPr, which are at a higher price, would the JARE contract then match that price?
Or are you still embedded with the Asian Metals Index price for that contract?
Thanks. The contract is silent on the pricing mechanism, so we are not embedded to any particular format for the pricing there. We do have contracts that are structured with reference to industry benchmarks, but that's not compelled as part of the contract. You are right, the significant point there is that we will make the product available for the Japanese market so long as it is at no commercial disadvantage to Lynas, which effectively means, yes, if we can sell at a higher price, then we have. The contract allows us to do that.
I say all of that while, at the same time, importantly, putting this in context. Today, I know there are many projects, but rare earth permanent magnets are produced in Japan, in Japanese factories, in Vietnam, and in China, largely, with maybe a very small volume being produced either in Europe or in the U.S. This remains an incredibly important market for Lynas. The relationship with JARE and with the Japanese government via JOGMEC is a really important relationship for Lynas. The way that we manage that relationship is important, but we certainly do have room to bank commercial benefit within the construct of the terms of that relationship.
Got it. Okay, that's helpful. I'll cue back for a second one. Thank you.
Thank you for the questions. One moment for the next question. Our next questions come from Paul Young of Goldman Sachs. Please go ahead.
Thanks, and good morning, Amanda. I hope you’re well. It’s been an incredible last few weeks.
With respect to going back to making product available up to 7,200 tonnes, that does not mean we have a contract with the Japanese government to buy product. It simply means that we will make that product available to the Japanese market. We are the leading supplier of fresh NdPr into the Japanese market, and we aim to remain in that position. I think it is important to note that Japanese magnet makers have significantly increased over the past quarter.
Their production has increased off the back of higher demand. After all of the concerns about reductions in exports from China, we continue to see this as a key part of our prosperity — working alongside those Japanese magnet makers and ensuring that we continue to grow. However, having said that, Japanese demand is still below the 7,200 tonnes. Our portfolio of customers includes the magnet makers in Japan. It includes working alongside those magnet makers as they quote on specific pieces of business. As we know, particularly in the automotive sector, the automotive OEM will be setting up a platform that will become their platform for five years, and you want to be in there at the beginning. We are working alongside those magnet makers to grow into other markets beyond just the Japanese market as well.
I think once again, this is the core of our business and it is incredibly important for us to maintain a strong, positive relationship because this is actually where the market is today. We are producing — unlike everybody else with their spreadsheets — we are producing, and we do have customers, and we will continue to supply them. However, having said that, as we've indicated previously, we have direct relationships with magnet buyers in addition to our relationships with magnet makers, and particularly with the addition of the DyTb, we can go into new markets, for example, microcapacitor markets, which are very positive for us. We see an entry into those markets not just with our heavies, but also with higher-value, particularly cerium materials, which are relevant for those particular sectors. With respect to the $110 price protection agreement that MP Materials have agreed with the U.S.
And its likely effect on the market — I think it's certainly not clear right now exactly how that will convert into market-based pricing. I think it has sent a clear message about the determination of the U.S. government to rebuild this sector outside China, and that certainly has a couple of different benefits. One is that it gives end users confidence to formulate material. I know that over many years there have been end users who've said, gee, we need to invest in alternate technologies because of the supply chain risks associated with rare earths only coming from China. I think we see a more vibrant and more buoyant market, generally speaking, and I think that will underpin increasing prices. Can it go above $110? Yeah. I think if you read the detail of the deal, there would be an expectation from the U.S.
government that that is likely to happen because they've negotiated upside share of any upside over the $110 as part of their agreement.
Okay, thanks Amanda.
Thank you.
Thank you for the questions. Our next question comes from Chen Jiang of Bank of America. Please go ahead.
Good morning, Amanda. Thank you for taking my question.
Hey.
Morning. Just not sure how much I can say, but if you can update us on your discussion with the US Department of Defense because you have been, you know, Lynas has been the partner with US Department of Defense over the last three or four years and you actually signed the contract, you know, backdated, you know, three or four years versus MP Materials. So I'm wondering, your MP Materials has secured a great deal with US Department of Defense. Does that mean Department of Defense now prefers MP Materials over Lynas? Do you see yourself in a relatively disadvantaged position versus MP Materials from US Department of Defense and US regulatory tailwind perspective? And how do a sales self positioning into the US rare earth supply chain development? Thank you.
Yeah, that’s an interesting question — and of course, you won’t be surprised that my first response is that I can’t really speak for how the U.S. government perceives anything. I think most people would be cautious about venturing into that territory.
Right, thank you, Amanda. I will call back. Thanks. Thanks.
Thank you for the questions. Our next question comes from the line. Reg Spencer from Canaccord Genuity. Please go ahead.
Morning Amanda and team. I'm not sure if Paul's on the line or whether he's able to, or whether you're able to help me out on the following question, but I'm going to continue along the line of pricing. How do you guys think China prices respond to that new, let's call it a benchmark? Whether it is or not is a different question. I note recent reports that China has actually notified some of the local producers of new production quotas, but they were not publicly disclosed to the market. Just trying to get a feel for what this means for overall global pricing for these products.
Chris is on the line now and looks after our sales activities. Having said that, I can probably deal with this in the first instance. Yes, our understanding, and we have some intelligence on what the quotas look like, but none of it has been formalized. I don't propose to articulate what those numbers are, except to say that we think the sorts of quotas that have been applied are consistent with the sort of language we were seeing before the tariff blowup from the Chinese, from the China government, with respect to bringing in an understanding of the imported material and including that within the quotas. What we see inside China today, as the export licenses are being issued, is growing demand inside China at present. I think we can see that. I think the price of NdPr has gone up.
The Asian Metals price of NdPr has gone up about $12 or $13 a kilo in the past month or so. We see that as very positive. I can't possibly imagine what goes on inside the heads of the China central government any more than I can what goes on inside the heads of the U.S. government. It does appear to me that there's a chance that the fact that the U.S. has been so definitive in its intention to do this means that many involved in the industry in China would see little value in cutting the guts out of the price as a strategy. It doesn't mean it won't happen, but it doesn't appear to have the same potential effect that it might have had previously.
Therefore, we then move on to what is the key lever that the Chinese still have, and that is that they are still, notwithstanding that we have commenced supply of separated heavies, the primary source of separated heavy rare earths. I refer you back to my earlier comments about our ability to separate heavies and the fact that we have heavies in our Mount Weld ore body, which is a key part of our competitive advantage in this market.
That's helpful. It sounds like it's a positive development. Nevertheless, I'm going to jump back in the queue, Amanda, but thank you for that. Appreciate it.
Thanks, Reg. Aren't you also very well behaved? Okay, thank you.
Thank you for the questions. Our next question comes from David Adam Deckelbaum from TD Cowen. Please go ahead.
Morning Amanda and team. Thanks for squeezing me on.
Hi David, nice to hear from you. Is it late for you?
Likewise. No, it's actually quite early because right now we have that 15-hour difference instead of 12. I appreciate you asking. In the meantime, I'm hoping that maybe you could share some color. You pointed it out, obviously, in the press release and commentary — you guys were selling at record levels of NdPr in the quarter. How do you foresee the trajectory of that in the ensuing quarters? Was some of that content that had been produced out of stockpile? And then, as a follow-up to that, obviously with the heavies content now being separated as well and sold, there was a tick-up in operating costs. How do you think about a levelized operating cost now in the ensuing quarters using these higher capacity levels?
Good questions. The first thing is that we didn’t significantly draw down inventory. We run, and always have run, pretty minimal levels of inventory, particularly for NdPr and Nd and Pr. Remember, and maybe sometimes I forget to remind everybody, that the fact that we can economically separate Nd and Pr also gives us access to markets that you can’t get to with just an NdPr material. We might have ended the quarter with a bit less inventory than we started the quarter, but it’s not particularly remarkable. Basically, we continue to sell pretty much everything that we produce, and we will continue to balance that as we go forward. We do hold a little bit more inventory than in the days when we finished a quarter with maybe 20 tonnes in the warehouse.
With respect to the costs, I think it's always tricky when you're looking at cash costs, which is what we have in this quarter, because sometimes, for example, at the end of last quarter, I think the final day of the quarter was a public holiday, and some of those sort of spilled over in cash terms into this quarter. In the second half of the year, we have the Kalgoorlie costs sitting on the P&L rather than being booked to the capital account. Notwithstanding all of that, even with what has been a pretty soft year in terms of pricing, we have continued to be able to generate positive operating cash. As we look at our cost assemblage as we move forward, there are pluses and minuses. As we bring the Mount Weld expansion online, we won't be running from day one at its full capacity.
How do we find a way to actually operate that asset in a way that captures as many cost benefits as we can? In Kalgoorlie, our focus has been on getting production ramped up and improving quality, reducing the level of non-rare earth impurities in that Mixed Rare Earth Carbonate because that fundamentally changes the way things operate in Malaysia. In Malaysia, we are looking at continuing to optimize costs, and it is looking pretty good. A really key focus as we get to stable production, particularly in Kalgoorlie, is how we now start to drive some costs out in that area. Things like the new gas pipeline and those sorts of things will certainly improve our performance there. We would expect that we will retain our lowest quartile position in terms of cost of production.
It remains an area that even if the price goes up, we don't go crazy. We understand that this is our muscle and we need to remain focused on it.
Appreciate that. Thank you for the question. I beg your pardon. I'll move on to the next question. The next question comes from Jonathon Sharp from CLSA. Please go ahead.
Yeah, hi Amanda and team, just a question on your downstream strategy. It seems you want to — the strategy is to go with an experienced partner, which seems wise — but can you just take us through this strategy of doing it with a partner versus going alone? Many potential rare earth producers, or even current rare earth producers, discuss or want to produce magnets on their own. What are your views on execution risk, and why did you decide that you want to go with a partner? What are the advantages? Thanks.
Yeah. If Pol were on the call, he would tell you that the first time he saw a presentation saying that a company was going to provide mine-to-magnet fully integrated capability was, I think he said, in about 1999. That is yet to actually be delivered. We have a healthy respect and process of assessing what we are good at, what we need to get better at, and what we need to learn. We are very, very good at understanding rare earths, geology, mineralogy, and processing. We're a good miner, and we're a good minerals processor. We're also very good at running big, complex chemical plants because that's essentially what the rare earth refineries are — as complex a chemical plant as you could ever find. Metal making and magnet making are a different skill.
Now.
Could we learn it? Yeah, I'm pretty confident that we could. I mean, 10 years ago we didn't know how to separate rare earths, and we're really very good at that now. Could we learn it? Yes. Will that take time?
Yes. Working with a partner who actually has those skills, where we can bring the combined value to the activity, we think gets us there faster and with less risk. Once again, I point to the fact that notwithstanding many, many PowerPoint presentations for mine-to-magnet, we've not actually seen that executed. We put execution at a high premium in our company. We see that the path we’ve chosen to do this in partnership is likely to get us to market sooner with a better product.
Okay, thanks Amanda.
Thank you.
Thank you for the questions. Our next question comes from Austin Yun from Macquarie. Please go ahead.
Morning Amanda and team. Just a quick one on the project — the Kalgoorlie facility. You mentioned in the report that more work will be put into this project for the ramp-up. I just wonder if you have a new timeline on when you can ramp up to the 10.5 thousand, and also any color on the CapEx outlook. Do you need to sink more cash into this project regarding the modification work? Thank you.
There are no significant additional capital needs to go into Kalgoorlie. You’ll be pleased to know, having made such a significant investment there, what we're really talking about here — and we saw this also as we developed —
Over the past decade, this has not been a simple “flick the switch and everything will be fine” process. We are dealing with a complex operation, and as I indicated, the primary focus is really about managing non-rare earth impurities. The fact that we had an initial flow sheet developed on the assumption that we would not have cracking in Malaysia — and now we do — has given us a few more challenges around the way we introduce the two materials into the facility in Malaysia. We are well progressed on that. We don't need Kalgoorlie to be operating at nameplate to reach the 10.5, but we do need it to be producing reliably at higher levels than we have achieved so far.
We can produce at those sorts of rates, but not yet at the quality we want for execution in Malaysia. These are issues at the margin. Our focus on the 10,500 tonnes a year is more about how we assess our ability to put this into the market in a way that maximizes our prices and returns rather than specifically on operating parameters.
Thank you. Amanda will appeal again for the second question.
Thank you for the questions. Our next question comes from Regan Burrows from Bell Potter. Please go ahead.
Hi Amanda and team.
Congratulations on a good finish to the year. It looks like you probably got a premium on your NdPr product in the realm of 15% to 20% over the quarter. I'm just curious, how sensitive are your Japanese customers to that increased pricing regime? If we compare it to the DoD–MP arrangement, the DoD is the backstop there, so the end customer doesn’t effectively pay any more for the material, which makes me think they are sensitive to pricing. I'm just curious whether that shifts your view and whether your Japanese customers have a similar perspective.
I'm not sure that that interpretation is necessarily correct. I mean, yes, there is a backstop to the $110, but if you read the documentation, there's an expectation that the product will be sold at commercial rates. I would expect, and we would hope, that we continue to see the strengthening of the market, and in that case, the Japanese magnet makers will be at no competitive disadvantage.
Thanks.
Okay. Thank you.
Thank you for the questions.
Yeah.
Our next question comes from Dim Ariyasinghe from UBS. Please go ahead.
Thanks.
Amanda, congrats on the results. G 'day. How are you?
Good and happy.
Yeah, not too bad — better off the result. Maybe if you could just help us on JSLink. Apologies for my ignorance. I agree it's probably better going downstream with a partner that has experience in this sector. Can you maybe enlighten us as to what that is, and then be so bold as to ask — are they willing to pay a higher price for your rare earths versus the benchmark?
I will invite Chris to make some comments on JSLink in a moment. I think I’ve indicated on some other calls that we see significant potential value from the Koreans. There has been investment across the Korean sector in developing rare earths, which shouldn’t surprise you — because why do you need rare earths? You need them for automotive and electronics. What are the key growth industries in Korea? Automotive and electronics. We are engaged with two or three different Korean companies that are either currently producing magnets, although in relatively smaller quantities than, say, the Japanese or the Chinese. We see this as a key growth sector in the market. Partnering effectively with producers and customers in Korea is certainly part of our view of the world moving forward.
With respect to Malaysia, of course, for the Malaysian government, Lynas has always been a part of it. It becomes a foundation for more industrial growth around it, which is why we’re focusing on both the opportunities for development of upstream and the opportunities for development of downstream. We are delighted that we’ve been able to sign this with JSLink, who have indicated a preparedness to invest in Malaysia. It doesn’t mean that we won’t engage with Korean magnet makers who are either investing in Korea or, indeed, in Vietnam. Chris, maybe I could hand to you if you wanted to say anything more about JSLink.
Yeah, thanks Amanda. JSLink — they’re one of the newer magnet-making operations out of Korea, and they’re publicly listed. They’re building a facility in Korea but also looking at overseas expansion. They’ve got some great technology and a very strong management team. I think it’s just another step forward in creating the new outside-China supply chain. Very excited about the news and look forward to working very closely. Thanks. I mean, the way I’m reading it is that with this announcement, you’ve got more clarity on ex-China NdPr capacity — another 3,000 tonnes, which is maybe 1,500 tonnes of NdPr, give or take. The biggest pushback, I think, for the stock was that you didn’t have extra-China capacity to deliver into. That’s changing quickly. I think so. Yep. Thanks.
That is right, Dan, it is. The more that the downstream grows outside of China, the better it is for us. We are very focused on developing those relationships and working alongside those that we see are going to be investing and developing their business in this area.
Thanks. Thank you for the questions. Our next question comes from Alistair Harvey from JPMorgan Chase & Co. Please go ahead.
Good morning, Amanda.
Hi, Alistair. How are you?
Very well. Just interested in your comments and your advancements in Malaysia, given those two recently signed MOUs. I’m just trying to get an understanding of the upstream versus downstream. Given you’ve got a lot of latent capacity upstream, at least across existing infrastructure, maybe you can help us understand why more upstream in Malaysia is important. Is it really around those other comments you mentioned in Dim’s question — around helping Malaysia with more industrialization and developing and improving the relationship there — or is it something else?
The upstream, as I think everybody who’s even a casual observer of this industry knows, the ionic clay deposits will have a slightly different assemblage of rare earths. We see that there is benefit from that — potential benefit from that — for Lynas. We also see that the benefit of really contributing to Malaysia’s prosperity will be good for our business.
Thanks, Amanda.
Thank you for the questions. One moment for the next question. Our next question comes from Mitch Ryan from Jefferies. Please go ahead.
Thanks, Amanda and team, for the question. Just following on around the JSLink MOU, does it preclude you from entering into similar agreements with other magnet manufacturers? Yeah, that's probably the key component of the question.
No, it does not.
Thank you for the questions. Allow me to move on to the next questions. I'll pull up questions from Daniel Morgan from Barrenjoey. Please go ahead.
We're back around, Amanda.
Back to the beginning again. That's good because it's 10:52 A.M. already. Yeah, okay. Sorry, Daniel.
That's all right. Obviously, you don't provide a lot of quantitative guidance, but if I may, you had a long period of investment in lots of new capacity and your cash balance has obviously dwindled while that occurs. That's understandable. We haven't got CapEx guidance or cost guidance for the year ahead, but maybe a simple one. Do you think that from here, the next quarter, is it a time where we start making free cash flow and adding back to the cash balance, or is there still investments that need to be made that might mean that's not the case?
I think we actually have indicated previously that we did see FY25 as sort of the end of the significant certainly of the Lynas 2025 capital.
You know.
To stop growing, you know, to stand still, is not a great place to be. Will we be looking at other opportunities for investment? Yes, but we are substantially complete. There will be some trailing capital payments because we didn’t feel it necessary to pay everybody before the year ended. There are some trailing capital payments, but no further significant commitments associated with the Mount Weld expansion or Lynas Kalgoorlie, which were the two really big projects as far as this was concerned. As we look forward, will we look at other investments which may include increased capacity for heavies in Malaysia and various other areas?
Yes, but we are very focused internally on the fact that we've spent this money on upsizing our capacity and, you know, our job now is to make sure that we deliver a return on those investments.
Thanks Amanda.
Thank you for the questions. We also have follow up questions from Paul Young of Goldman Sachs. Please go ahead.
Thanks Amanda. Yeah, back again — a question on the next 12 months. I know it's all about the big picture though, from the perspective that you ramp to 10 and then look at options beyond that — sorry, ramp to 12 and look at options beyond that. Further to your comments just then, just on the next 12 months and looking at the ramp-up amount, which is actually going really well, and you'll be producing first flotation concentrate in the September quarter. I'm sure Chris Jenney will ramp this one up quickly. When you do ramp this up over the next 12 months, considering that the Japanese can't take all the 7.2 — the three customers — what happens here?
Do you A, sell excess production to China? B, do you stock polyoxide material like MP's doing or C, do you slow down the ramp up after you've tested in that world?
We most likely slow down the ramp up after we've tested to pull. We can look to different ways to manage, you know, or to operate. We can look at, you know, do we run sort of a quasi batch, you know, sort of campaign-based approach? We did that for many, many years very successfully as we were, you know, sort of improving performance in Malaysia. There are a variety of paths, pathways available to us. For us, producing to a stockpile we don't see as being on the face of it particularly attractive. Maybe carrying a bit more inventory, as I said earlier, than we have traditionally done could have some value to it.
But.
We think that the sensible thing is to match to the market rather than everyone get a rush of the blood to the head and end up producing it at rates that flood the market. That will be the way that we look at it. You can't bank it out. You can bank a dollar.
Got it. Basically, you're saying you're matching to the ex-China, ex-China market effectively.
We have some customers inside China, Paul, who have been customers for many, many years and who have been good, faithful, and loyal customers. We would expect that we will continue to do business with them. Yes, our primary market is outside China.
Yep, understood. Okay, thank you, Amanda.
Thanks.
Thank you for the questions. Our next follow-up question comes from Reg Spencer, from Canaccord Genuity. Please go ahead.
Thank you. Looks like I just got squeezed in. Before you cut me off on the hour, ma'am, just a quick question on Texas. Noting your comments that it looks like there's a bit more engineering and the likely impact on capital. More interested about the product that might come out of the Texas Heavies plant. I know you don't like to talk too much about what MP Materials is doing, but if you have a look at the plan for magnet manufacturing capacity expansions, one thing I think everyone can agree on is MP Materials don't have a lot of heavies. How do you think Texas, what you're doing in Texas, might fit into the broader strategy of the DoD to build out that magnet supply chain there?
Could you be a customer, for example, of that magnet facility? Yeah, I'd be interested in your comments on that. Thank you.
You mean a supplier?
Yes, correct. Sorry, Supplier.
Potentially. Yeah, sure. I mean, we are in the business of making product and selling products. If we have someone who wishes to pay us for the product that we produce, then we will certainly give that due consideration.
Excellent. Interesting times. Thanks, Amanda. Really appreciate it.
ThanksReg .
Thank you. Our next follow-up questions come from David Adam Deckelbaum from TD Cowen. Please go ahead,
David, your line is open. Please go ahead. Thank you. Just to square all the comments at a high level, when you think about the 12,000 ton expansion and you're at capacity, you referenced the Japanese market before, any agreements there. How do you sort of envision the split of Japanese sales versus ex-Japanese and ex-China sales once you're at full capacity, based on what you think in terms of the Japanese market growing and the requirements to serve that market?
Oh, that’s a very big question, David. I think we see that Japan remains our foundational volume market, and we have extremely strong relationships there and good, strong contracts. The Japanese magnet makers are more than competent — I mean, they invented rare earth permanent magnets. The Japanese material scientists still know more and have more technology than most other magnet makers in the world. In fact, on a number of items that are definite gaps for some of the aspirational magnet makers outside of China, the Japanese have the technology, while some of the others do not, and therefore are unable to capture the same sort of economies that the Japanese magnet makers can.
We We do see that our rock-solid foundation remains our relationships with Japanese magnet makers and Japanese magnet buyers, of course, as well as with other segments in the Japanese market — whether it's AutoCAD or the MLCC microcapacitor market, in electronics as well as in automotive, as I mentioned before. We are working very hard with a number of the aspirational or existing producers, with a focus first on those who have a proven capability, like the Korean magnet makers, to grow that business. We see that as being very positive and probably a significant sector in our business portfolio as we move forward. As we see the development of magnet-making capacity in the U.S. and Europe, we are engaged both with those potential magnet projects and with the magnet buyers. Japan will remain key.
I think that at least for the next few years we would see that East and Southeast Asia remains, you know, sort of the key engine room of the rare earth market. We are happy to partner and to support development of capability outside of that jurisdiction as it develops.
Thank you. In the interest of time, we will now take the last questions from Austin Yun of Macquarie. Please go ahead.
Thank you. Amanda, just on your comment that your production will match the future demand and the conscious that you see there are not many magnet facilities outside of China, is that correct? To understand that your future production expansion going to be enabled by additional JV announcement as the one you announced today with JSLink. There should be more similar partnership to be announced in the next few years. Thank you.
Oh, Austin, you know that I don't announce ahead of time. I think that suffice to say that we assess every opportunity on its merits. We are a serious player in the rare earth market. It is our core competence. We wake up every morning thinking about it right across our business. Therefore, we will participate in this market in the way that is going to deliver best outcome for all of our stakeholders.
Thank you for the call. I would like to hand the call back to the management for closing.
Okay, so once again, thank you all. I'm sure that we will be speaking again in relatively short order as we next month bring forward our annual results. Hope you all have a great day.
That does conclude today's conference call. Thank you for your participation. You may now disconnect your lines.