Good morning and welcome to our investor briefing for the September quarter of FY 2026. Today's briefing will be presented by Amanda Lacaze, CEO and Managing Director, and joining Amanda today are Gaudenz Sturzenegger, CFO, Daniel Havas, VP Strategy and Investor Relations, Chris Jenney, VP Sales and Market Development, and Sarah Leonard, General Counsel and Company Secretary. I'll now hand over to Amanda Lacaze. Please go ahead Amanda.
Thanks Jen. Good morning everybody. Thank you all for joining us this morning. I am sure because I actually have a sneak preview that there are many questions, there are many in the queue already, so I will keep my introductory comments relatively short. I expect many of you will want to talk about the various geopolitics because we do live in an interesting world, don't we?
I want to start by talking about our business performance because, you know, we had a strong quarter in terms of business operations. The operating cash flow at about AUD 55 million + was a really pleasing return to a more what we would see as a better level, and we see that as we look at current market settings, gives us quite a deal of confidence as we move forward. Of course, we are still seeing some runoff, particularly associated with the major projects, particularly Mt Weld, but that should mostly be flushed through the system by the end of this calendar year. That strong operating cash flow, of course, reflects sales. I know that everyone likes to get very focused on production numbers, and of course we are very focused on production numbers. What actually matters is what we sell. We don't bank tonnes, we bank dollars.
We had a good quarter in terms of sales at AUD 200 million for the quarter, the best in several years, reflecting both the higher volume and also the higher prices that were achieved during the quarter. Production at just over 2,000 tonnes of NdPr and, sort of very positively, nearly 4,000 tonnes in total. I thought it was quite interesting that we had a number of, you know, sort of, we've seen a number of comments about, it was a bit less than what was expected, but then when I really interrogated those, we're talking about less than 100 tonnes being the difference between expectation and performance. Put that in perspective. It's about four days' production for us. We had our production where we wanted our production to be.
It served all of our key customers without creating any supply side pressure or causing us to need to sell ahead of finalizing a number of agreements on which we are working with respect to the heavies. I may regret the fact that on the heavies we have for the first time disclosed the amount of DyTb and once again I read some commentary about it being a bit lower than was expected. I would remind everyone that the way that we have characterized the DyTb circuit that we've got at Malaysia at present is it was really an opportunity development for us. We had some mixers and settlers available. It's just a small circuit which is selectively separating a portion of the DyTb, not even all of it within the segment that we produce alongside our current NdPr, but sufficient to test the market ahead of our larger expansion.
I would also, just to assist people to understand this, say we're not actually selling our SEGH into the market at all at present. We are stockpiling it ahead of future processing capability. In response to some of the questions I've had about sales volumes and how quickly they come online, some are done and dusted, others this is a new product and customers have certain qualification periods. Suffice to say that in terms of testing the market, we have identified extremely strong demand and we have also identified a preparedness to pay because of the scarcity of the material from ex-China sources. Of course, that is the reason why it is the first of our Towards 2030 projects that we will be bringing online, which is the full scale HRE separation facility.
To do the full scale separation requires us ultimately to put in a new building, put in new mixers, settlers, precipitation, filtration, tunnel, and furnaces. We, as I think everybody who follows us knows, are always keen to move as quickly as we can. We have looked at what are opportunities to incrementally increase production as we move forward with the larger plan. That includes doing some work with our current SX configuration which would allow us to bring samarium production online in the first half of 2026 calendar year. Samarium is an element which is in demand at present. We require those customers who need it to finalize some agreements with us on, as I said, the little circuit that we've got at present is sufficient to have given us an opportunity to test the market.
As we think about how we derive value from our heavies, it is a combination of the margin just on the sale of the heavies. Bear in mind relatively small markets, you know, the total outside China market for Dy we estimated about 400 tons. There is a certain amount which comes from just the pure margin on sales and more beneficially really in the medium to long term is the ability to bundle it with our other products in a way that serves customers' total needs rather than them having to have multiple suppliers. During the quarter, operations ran very smoothly at Mt Weld. We operated on our old plant for most of the quarter as we were completing our commissioning activities for the new plant, which are progressing to plan.
We had a pretty exciting time where as we're bringing on our new gas hybrid renewable power station, we were able to run the plant for, I think, close to a week on 100% renewable power only. That's pretty exciting for everybody in Lynas. In Kalgoorlie, as we've identified, we made certain flowsheet adjustments which are now delivering results and we expect now to be able to progressively ramp up production in very good order and at the LAMP running very smoothly. As we indicated in the release, we will be doing these tie-in works for SM&SX during this quarter. That, alongside some of the continuing market volatility, means that we are going to manage our production rates very carefully and may trim that to accommodate some of that tie-in work because we see the early production of samarium as being very valuable.
During the quarter, many of you who are on the call participated in our capital raise, which sets us up for the next stage of growth, the creatively named Towards 2030. We've already disclosed some of the a reas w here we will be utilizing that funding. The new HRE plant in Malaysia being the most significant. We've also released two magnet non-binding MOUs. I can assure you that we are progressing to definitive documentation of those MOUs as quickly as possible. We are also continuing to negotiate long-term supply agreements with key end users in each of the key categories. Magnifiers most certainly, but also electronics. This is a high demand market and particularly in terms of micro capacitors, significant growth and a preparedness to pay for quality which Lynas can deliver. Turning a little to the geopolitics and the issue, the effect on the market, I say again that we are managing carefully and managing risk as we look into this very volatile market. Suffice to say that rare earth has, in our view, because we think rare earth is the most important thing.
We wake up thinking about it in the morning and go to bed thinking about it at night. It's definitely got the attention that it deserves from various different governments. As you look at some of the announcements that have been made, you can see that for now the key focus has been on some of the development projects. I would offer the view that this is because they are relatively easy for governments to execute with their current funding instruments. Every government has something like our EFA or has other, or our NAIF or other sort of debt funding capability. Some of the other policy initiatives are a little more complex and will require governments to think about some different systems to be able to support it. I would assure you that governments do understand that this is not a simple supply side fix.
Even though some of the announcements may lead you to think that they think that right now there is a recognition that there is a market failure which is shown in the price and also in the development of processing capability, including metals and magnets outside of China. It's actually a little less about resource, but resource has a very long lead time, but it is more about market failure. I think as everybody who's even a passing observer would know, the MP deal does address all these elements. It addresses the issue of market failure with the price floor. It addresses the issue of market failure and processing with its support for the development of magnet making in the U.S.
I think that, you know, it seemed to come out of nowhere but MP was facing an existential crisis as a result of, you know, the tariff and trade restrictions between China and the U.S., and, you know, the timely implementation of that deal was important. I think that what we're seeing right now is many governments who are actually working together. We're looking forward to hearing some expected outcomes from the G7 to ensure that the policy settings are right and that the like-minded governments are aligned in their approach. I think governments also understand that there is no use pouring capital into this sector if the businesses can't be profitable in the long term. Of course, that is the importance of getting the policy settings right, particularly on price for Lynas. Yeah, because as I said before, we always like to get things done yesterday.
Working with government can sometimes be a little frustrating because things take the time that things take. However, I would remind everyone that it's the only proven operator in the current proven supply chain. We have options and we have value and we will not spend that value cheaply. Whilst the market continues to be volatile, we will manage prudently. I would simply point you to our track record of ensuring that we do get full value from whatever dynamics we see in the market. For us, as we look at this, we see good quarter in terms of performance. The uplift in price, because we are a current producer, is flowing through into our bank accounts immediately.
We continue to see the international focus on the rare earth market is ultimately a very positive thing for Lynas and look forward to sharing with you in the future some better outcomes in that space. With that, I'm happy to take questions.
Thank you, Amanda. As a reminder to ask a question, please press star one and one on your telephone keypad and wait for your name to be announced. Please ask one question. If you have more questions, please requeue. To withdraw your question, please press star one one again. Please stand by as we compile the Q&A roster. First question comes from Daniel Morgan from Barrenjoey. Please go ahead.
Hi, Amanda and Tim. Question. My first question is just on production volume, which was slightly down sequentially quarter on quarter. Just looking to understand that a bit more. Is that a reflection of demand being still patchy? Is it you're looking to negotiate off takes and so let's not produce a lot and go into inventory, or is it three, there has been some disruption to the operations from tie ins at Mt Weld, some modifications to fixed volume at fixed quality at Kalgoorlie, etc. Can I just understand how volume, how are you looking to set the business near term?
Yeah, Daniel, we produced almost exactly what we intended to produce. Yes, you're right. I think it was 80 tonnes, 70 tonnes less than it was last quarter, but somewhere around about that 2,000 tonnes was, you know, we were very comfortable with that. It was not. There were no significant operating disruptions and certainly not from the new assets. We don't. We never see value. I mean, we carry that little bit of inventory, but we never see value in producing a lot of product for inventory. This was sufficient to ensure that we met customer needs across all geographic markets, you know, so we do continue to make sales to, of course, our Japanese customers, but also to customers in China and in the rest of the world.
We were able to serve all of that and there were no issues with Mt Weld Kalgoorlie, as we said, we had, you know, operating at lower rates as we did make some flow sheet changes there, which now, you know, appear to be doing exactly what we planned for them to do. The lab worked very, you know, exactly according to plan.
Sorry, just to clarify, should I take that as 2,000 tonnes a quarter is sort of where the business should sit for the near term until something changes.
I think we will, I think the market is so volatile right now, but we will be cautious about, you know, sort of even giving that vaguest of guidance. Daniel, suffice to say that we will ensure that we are continuing to meet the demand of all of our strategic customers and are working on developing new sales agreements.
Okay, thanks Amanda. I'll rejoin the queue .
Thank you. Next we have David Deckelbaum from TD Cowen. Please go ahead.
Thanks Amanda and congrats on all the e xciting announcements out there.
Thanks David.
I wanted to follow up just to talk about the heavy facility in Malaysia and t he priority around samarium.
Is that informed by just process flow sheet, or is that where you see the highest value products coming out of the heavy mix? Or is it in response to extremely near-term potential around offtake agreements?
It's mostly about demand. The highest demand materials are the Dy and Tb. Unfortunately, we can't significantly increase that production until we put in the new circuits. The samarium we can do by making a change to one of our circuits, which adds an additional outlet. Given that there is significant demand for samarium in some very targeted sectors, we think that we can do that without causing too much disruption to production. That would mean that instead of having to wait until 2027 for that material, it should be available in the first half of next year. It definitely is an in-demand material. We are finalizing relevant price agreements on that as we speak w hich are a n important part of us deciding to proceed on this pathway.
Appreciate it.
Thank you. Just a moment for our next question, please.
No more questions. Crazy. Next question.
We have Jonathan Sharp from CLSA .
Yeah, hi Amanda and team, congratulations on yesterday's announcement. Definitely a big positive and my understanding is that it will likely open doors to other customers, not just with heavies, but also NdPr. Really should help with those NdPr sales as you ramp up, which is positive, but that's not my question. My question is around incremental cost of processing the heavies, specifically in the solvent extraction separation phase. I know you're not going to tell us what the costs are, so maybe I'll ask it another way. What proportion of total unit costs of the heavies within the solvent extraction? I would imagine it's quite low.
Okay, so there are no significant incremental variable costs to the separation of the heavies right now. Right, because the circuits were already in place. They already had, we did have to load those, but that's already been done sort of in the back half of last financial year.
And t he contribution to cost of running that circuit and running the furnaces and product finishing is not significant. This is giving us a, you know, almost this tiny little circuit gives us a bit of a free kick when it comes to the, to the bigger facility that you know will come into operation in 18 months time. Once again we would see that it's not going to be. There will be some incremental costs. What we're basically doing is today we process or up until, you know, sort of May we process the SEG. It goes through solvent extraction and then it goes through product finishing, you know, the wet cycle and then into, you know, and is calcined.
What we're doing is that we won't be using those facilities and we will be able to use what we've freed up there for our products and it will be simply going through the different facilities. We have the capital cost of all of the new mixer settlers. We will have the capital cost of first fill of those loading them with material. The incremental cost to process will be relatively small.
Okay, thanks. I'd love to know the amount but I know you're not going to tell me, so I will jump back in the queue and I have another question later. Thanks.
Okay.
Thank you. Next we have Chen Jiang from Bank of Americ . Please go ahead.
Good afternoon Amanda. Thank you for taking my question. My question is for your price realization for this quarter. In AUD 54 per kilogram, but you have heavy rare earths produced for this quarter. For example, the European so-called benchmark for terbium is around AUD 4,000 per kilogram. That's like four times versus China's price. Right. The same as dysprosium. I'm wondering what happened to your price realization for this quarter. NdPr quarter over quarter in China was up 26% and then you have heavy. If you can provide us any color on the heavy price, how the European price works versus China price as well as your NdPr price. I'm not saying that NdPr price jump realized in your revenue. Thank you.
Sure. Okay, Chen, first of all, the heavy pricing, right. You can see we made nine tonnes, right. Even if we sold every one of those nine tonnes for, I don't know, AUD 10,000 a kilo, it is not going to move the dial on the average pricing yet, right. Let's just put that aside. On the NdPr, as we explained previously, some of our major customer contracts reference an end of prior month price. When the price is going up, we tend to lag it a bit on the way up, and when it's coming down, we lag it on the way down. You have not seen the full value in this quarter of the uplift in price during the quarter, and that's just a reflection of the way that our pricing contracts operate.
Can I have a follow up, Amanda, just on what you commented on the NdPr? The weaker than expected well realized price is because your pricing contract is lagged a month or two, and then you have increasing NdPr price. For the heavies, you quoted some amount. Are you achieving the sort of the European price versus the price?
I'm not even sure where you're getting the European price from. We are achieving on the products that we have sold today. We are very pleased with the price, and it is not pegged to. Each of the prices is a customer-specific price and negotiated with each customer on a commercial and confidence basis. It is not anything even vaguely like the inside China price. As we said, the market demand is strong, and we have a great deal of flexibility in choosing to whom we sell and at what price we sell.
Sure. Understand. Thank you, Amanda. I'll pass it on.
Thank you.
Thank you. Next we have Paul Young from Goldman Sachs. Please go ahead.
Hi Amanda, hope you're well.
Yeah.
Amanda, another question on the heavy rare circuit. Just trying to understand from a, first of all, thanks for providing the production data. It does take a while for the heavies to work through the circuit, you know, a couple of quarters. I understand there's a lag there, but just trying to understand the capacity in production, you know, from a modeling standpoint, you know what we should be throwing in the models. I know that you did have, or you do have, sorry, 12,000 tonnes of SEG capacity and this announcement, the AUD 180 million, you're achieving another, you'll get 3,000 tonnes of heavy rare earth oxide products. Just wanting to understand, is this incremental? At the end of this, are we getting one and a half and three for 4,500 tonnes of total capacity of heavies oxides?
No, we won't. We will have the one outcome, which is the tonnage that we were talking about yesterday. It is not additive to the tiny little DyTb circuit that we have in place right now. Once we put in the new facility, we will then free that circuit up and we will use it productively for some other.
Yeah, understood.
Okay, that's helpful, Amanda. Just a part B to that then just for the Mt Weld. When you look at, on the go forward, when Mt Weld's fully ramped up and you look at the Duncan ore and you look at the assemblage and the heavies coming through, whether you campaign that or not, can Mt Weld under the expanded scenario or the expansion, I should say, fully feed that heavy circuit or will you have, and what percentage, and will you have spare capacity to take, I guess, a third party ionic clays in Malaysia?
Yeah.
Yeah, okay. Excellent question, Paul. We could high grade, I've got quotation marks around in the air here, but high grade for the heavies at Mt Weld, which would mean that we would deplete them faster, of course, if required to 100% feed that circuit. Between now and when that circuit comes online, we have a number of things that we need to do to improve our recoveries on heavies, which are not at the same rate as our recoveries on light because we haven't managed for that over many years, to be fair. They do perform differently, right from the float circuit in Mt Weld through to Malaysia. We will always understand, we are thoughtful in the way that we manage these things. There is no point in sort of mining more heavies but then having it report to tailings because we haven't actually optimized our processing.
We've got time to do that before the new plant is operating in Malaysia. That's the first thing for us to do. Our preference would be that that facility will take feedstock from, and absolutely our preference is from developed ionic clay deposits in Malaysia in addition to the feedstock coming from Mt Weld. We have a team whose job it is to work with various Malaysian partners on that development process. The Malaysian ionic clay, all indications are that it will perform, you know, in the same way that the ionic clays in southern China and Myanmar and Laos perform. We see this as being an excellent opportunity to further contribute to Malaysian economic development. Also, as we know, ionic clays will typically give us a higher, you know, sort of proportion of heavies and so therefore suitable for feeding to this new plant.
That's a very long answer to your question, Paul, which was yes, we could if we had to serve it out of Mt Weld. Our preference will be that we have at least two feedstocks and potentially more if any other projects come online into that facility.
That's helpful, Amanda, thank you.
Thanks Paul.
Thank you. As a reminder, please ask one question. If you have a follow-up question, please rejoin the queue. Next, we have Mitch Ryan from Jefferies. Please go ahead.
Thanks Amanda. Thank you team you called about.
Just can y ou comment on the cost pressure as you move consumables supply chain away from China? How long do you expect until your supply chain is completely independent? Could you help us understand what percent of your cost base do those consumables currently represent?
Yeah, we have been working on this since the first trade spat that started in April because China is quite nuanced in its use of non-price controls alongside the price controls that it's used over time. We have identified alternate supply sources for all inputs in our facilities, both consumables and also equipment. We at present see that there will be some cost penalties associated with those, but we won't see those in this financial year because of the way that we've managed inventory in particular. Given how much things can change at present in the rare earth world on almost a daily basis, I'm disinclined to provide a cost forecast niche for, you know, sort of nine months' time. We are confident in our ability to source relevant materials without crippling the business.
I wouldn't want to be trying to build a new rare earth facility, however, just right now with no access to any China equipment at all. When we built Kalgoorlie, we did make a decision not to put any Chinese equipment in it. It's probably got a, you know, probably on the equipment cost, cost us probably about 25% - 30% more than if we'd had Chinese sourced equipment. I think this will be a bit of a challenge for some of the new projects coming proposing to construct over the next little while.
Thank you.
Given that comment, I assume therefore that the heavy rare earth circuit that's being proposed at Malaysia will also apply the same strategy.
Sure, yeah. I can assure you this, that if we went to a Chinese supplier today and asked to ship to Lynas a new piece of kit of some sort, they would probably say thank you very much, but our production line is full. If they were being polite, and if they weren't being polite, they'd just say no,
Okay, thank you.
Thank you.
Thank you. Next we have Reg Spencer from Canaccord. Please go ahead.
Thank you.
Good morning, Amanda and team. I'd like to ask about a topic that seems to be getting everyone breathless at the moment, and that's price floors. We know that such things have been floated with respect to the Australian Critical Minerals Reserve, and we'd all have to think that Lynas would be a candidate to get some such floor pricing. What do you think? What kind of impact is that going to have? Given that you are working on additional supply contracts independent of Asia Metals Index and aside from the Japanese contracts, what kind of impact on pricing should we be thinking about? I'm really just trying to figure out where the base level pricing or reference point should be for your main product. Doing your NdPr?
Yeah, good question, Rach. I think that governments do recognize, as I said in my opening comments, that it's one thing to put the capital on the ground to build a project, the next challenge is to make it work. It's altogether another thing for that to become a profitable business and to become a profitable and sustainable business, it needs to have pricing, a functioning market in terms of pricing. I think governments absolutely do understand this and they also understand that whilst it's important to support, and we support the development of the industry over time, the ultimate remedy for all of this is to have an ex-China industry of sufficient scale to balance out the inside China capability. Today there is only one, there is a functioning supply chain and Lynas is at the heart of that supply chain.
Therefore, ensuring that policies put in place which support that supply chain success is really important. I think, as you've said, Reg, it is highlighted in a number of the announcements. I think we look here in Australia and we see that the government is not fearful of taking action to support or to intervene where industries are at risk. I think that what we've got is a number of governments who are seeking to make sure that whatever they do is aligned and ultimately constructive. Having said that, our view would be that the MP deal sets the flag goal posts here. That'd be a better way to describe it, wouldn't it? I mean the goals, not the behinds.
Thanks, Amanda. I have a follow up associated question to that, but I'll take that offline and pass it on. Thanks very much. That's helpful.
Thanks, Reg.
Thank you. Next we have Austin Yun of Macquarie. Please go ahead.
Hi Amanda. Thank you. Thank you for taking my question. Just a quick one. As you point out in the opening remark, AMP is not a full solution for the U.S. Government. I'm conscious that you do have a project in the United States right next door and feeding to this heavy risk demand. Keen to get an update on that discussion. Given a lot has happened in the last few weeks, does the current market condition provide a bit of a support to accelerate that project? Thank you.
We have referenced this in the report and we also did use a carefully considered form of words when we went to the market for the capital at the end of August. Where we are at present is that there is significant uncertainty as to whether we will proceed with that facility and if so, in what form. We continue to work with the Dow and in particular on offtake agreement which will ensure that the Dow, you know, has the materials which are critical for their applications and that Lynas is in a position to be able to gain benefit from our capability and that includes the construction of the plant in Malaysia.
I think, you know, I've talked previously about, you know, sort of the fact that when we are doing something ourselves on our own sites, we're able to deliver projects much more quickly than on any other scenario and much more cost effectively. Ultimately that's why we've made the decision to, you know, sort of focus our attention on delivering the new plant in Malaysia, bearing in mind that a lot of our engineering and design work that we've undertaken over the past four or five years actually feeds in very productively to that. It is well worth remembering also that it remains that the key markets for rare earths remain in East Asia and Southeast and East Asia. It also remains that the location of our processing facility in Malaysia is really fit for purpose.
Thank you.
That's very clear.
Thank you. Next we have Matthew Hope from Ord Minnett. Please go ahead.
Thanks, Amanda. Just wanted to circle back to the NdPr pricing. Certainly with your discussion about what was happening in the market, you referencing China and again I think you indicated your Japan contacts linked to end of month prices in China. Just wondering, is there any mechanism to start to delink from China? Because China pricing is obviously quite different from the rest of the world in most products and even NdPr seems to be a bit lower than what's outside China. Is there any mechanism to sort of renegotiate those or change them or do they roll off over time?
We can change them, but customers have to have a preparedness to pay. Right now, notwithstanding everything which is written, most customers, you know, have an option to source magnets from outside China or magnets from inside China, and still 90% of them are sourced from inside China.
So, w e are able, on occasion we would say that, in fact we often talk about this as there's probably three segments of customers. One who understands that they should embrace a risk-based pricing model, because the risk to their business of having to shut down. Bear in mind there are at least a couple of car lines that shut down in April, May this year as a result of the new license signal regime in China. There's a group of customers who are continuing to assess and recognize they probably need to do things differently. Then there's a fairly substantial group of customers who think that if they keep their fingers crossed and their eyes closed and wish very hard that this will all go away and they'll be able to just continue to use cheap materials from China.
We're working through those groups and of course our primary focus is on the first group, which is the ones who recognize that risk-based pricing, which is fair pricing, is something that they need to embrace within their business. We are progressively working on various different agreements with those customers, but across the market, you're just going to have a different price outside China from the one inside China. That is something which will rely upon customer performance and potentially policy settings. Various governments can influence that pretty quickly, and we've seen it with some of the settings. For example, U.S. defense industries can't use material sourced from China from January 1, 2027 under the DFARS Act. Governments can do it, but not all customers outside China understand that if they want ongoing supply that they need to pay a fair price.
Right, okay. Just sort of DyTb, noted what you said about the recoveries being lower and the fact that the circuit's very small. Does that mean that the sort of 9 tonnes of DyTb that's produced in the September quarter, is that kind of normalized or has it still got a fair way before?
Got some upside to that, Matthew.
Right, okay. Thank you.
Thank you.
Thank you. Next we have Rahul Anand from Morgan Stanley. Please go ahead.
Hi Amanda and team, thanks for the call. A lot of my questions have been asked, but I still have one which I wanted to touch upon, which is the Malaysian ionic clay deposits. Could you help us perhaps understand sort of, you know, how much you've looked into them. I'm sure you've looked at them a lot given your lamp plant. I wanted to understand in terms of, you know, firstly in terms of the processing side of things, I would believe that the processing costs are lower, but then some ionic clays can be problematic as well in terms of acid use and obviously carbonation, etc. How do these things sit? Why has Malaysia sort of not been able to do that themselves in the past and kind of struggled in terms of volumes. Thanks.
Yeah, so we're quite progressed. We have announced one MoU with the clientele and state government. The deposits which are sitting in Malaysia either sit. It's not quite as easy as it is in Australia where the crown owns all of the minerals under the ground. Some of them are owned by the state, some of them are owned privately, some of them are owned by the royal families. We're sort of working through that process and where relevant, are executing agreements with the relevant owners. Now we're in Pahang. The states sitting on the east coast of Malaysia are particularly attractive to us, A because they appear to have the right sort of geology and B, because their proximity to the plant.
In terms o f the ability to process and upgrade that material. Why haven't the Malaysians done it to date? A fair bit of that material has previously gone into China for processing, so there's not been the same focus on domestic processing. Last year, the Malaysian government, recognizing the value of this, introduced a moratorium on the export of unprocessed rare earth materials with the objective of encouraging more development in this sector. As I said, very responsive therefore, to Lynas as a company with skills in this area. The more general comment about why hasn't it been done is because not very many people know about processing rare earths. Lynas is one of the very few firms outside of China that does know how to do it. That's really the partnership that we're going to develop in Malaysia.
We see it as a highly precise opportunity for future feedstock for particularly the heavy circuit. Those clays will also, not only will they bring us heavies, but they will bring us additional NdPr as well.
Excellent. Thank you for that. Cheers.
Thanks.
Thank you. Next we have Regan Burrows from Bell Potter Securities . Please go ahead.
Hi, Amanda and team. A lot of the questions have been asked. Just one on, I guess, the broader market dynamics. Obviously, the governments around the world, especially in the Western world, are supporting a lot of these projects, and we're seeing a lot of companies state that they'll come online within the next couple of years and add supplies to the market. Just curious on your view, is there enough room for everyone to be feeding into the ex-China market, and how does that sort of infer your thinking around capacity expansions up to that 12,000 tonnes round? Right, thank you.
Thanks, Regan. I don't actually spend much time thinking about them. I've got more than enough time to think about our own business. I think that the earliest date that anyone is even, you know, sort of suggesting is, I think, late 2027, and I would be surprised if there's anything coming to the market at scale at that time. A more substantive question is, is there demand outside China? Yes, there is. Can it be served with the industry structured the way that it is today? Actually, it could be serviced via, you know, in terms of resource, via sort of current operators, i.e., Lynas and MP. However, it is the magnet steps that need to significantly grow to be able to serve the outside China demand. Industry forecasts are for continuing growth, and there is no reason to suppose that it won't continue to g row somewhere .
Yeah, certainly in the high single or low double digit numbers on an annualized basis. There's going to be much demand and as I said in my earlier comments, the best thing for everybody is for there to be critical mass in the ex-China industry. It is really important and I think that governments do understand this. There is still a big gap between where we are today and getting to a stage where there is a large functioning ex-China industry. In the meantime, it's incumbent on them to protect the current functioning supply chain and Lynas is at the center of that. Yeah, look, there's demand. It's just a case of making sure that this capability is in all stages of the value chain.
If you see that supply enter the market, does that shape your thinking around capacity from LAMP and your business?
I think not particularly, no. We run our own race, we focus on customers that we seek to acquire, and anyone who wants to chase us, that's fine, but you know, we run our own race.
Thank you, thank you for taking my question.
Thanks, Regan. Thank you.
Next we have [Scott Roll from Rima Equity Research], please go ahead.
Hi Amanda, thanks very much for the detail you've offered today. I'm looking, I guess, a bit more at the future. When you did your equity raising at the time of your full year result, which, if you can believe it, is only two months ago almost to the day, you gave some splits around the uses of the funds, particularly in those growth areas of add resource scale, increase downstream capacity, and expand into the metal and magnet supply chain. You got some indicative splits there, and I'm just wondering if you have adjusted any thinking given such a lot has happened in this sector over the last two months as to where the best incremental returns on capital for Lynas are across those growth areas over the next five years.
As you work towards your 2030 strategy, please, if anything has changed materially or, as you say, you're still running your own race.
No, nothing has changed materially. I think that what we said and we said then was the first project that we would bring back to the market would be the heavies. We have done that, and that is because it is absolutely a gap right now in the non-Chinese market. There have been a lot of questions today about, and I've responded and maybe been a little bit harsh on some customers. Whilst customers are still reliant upon China for their heavies, it makes it sort of tricky for them to be shifting their lights sort of demand as well. That is why the heavies has been absolutely front and center for us in terms of development, and we can have that operating and we have an excellent track record in terms of execution.
We can have that operating, we expect, in calendar 2027 with some of, as we said, the product earlier. We think that will be really important in terms of our overall product offering into the market and giving customers confidence to switch their supply chain, so it remains top of the pops. It is not just about the margin on the heavies, but it is about the NdPr that goes with it.
And then y ou know, we look at that and we say, okay, so we've got capacity there and you would have noted that, you know, we probably got a bit of headroom in that capacity. That means that the next thing which is really important for us to nail is additional complementary feedstock sources. Right. We ultimately are a minerals and minerals processing company. You know, we live or die on the quality of our resources. Adding more to that is sort of the next priority, very quickly followed by ensuring that there is the opportunity for us to sell that into non-China processing facilities, both metal and magnet making. The three areas remain exactly the same with the priority being as I've just described. That is really pretty much what we said two months ago.
I think you would all be very disappointed, notwithstanding everything which is going on geopolitically, if two months after a capital raise I said to you, oh no, all the cards are in the air and we're going to change everything. You'd be, you know, what's going on, you know, don't they know what they're doing here? I think it is very easy to get distracted by the daily announcements. If we tried to change course every time a politician somewhere in the world had some sort of a thought bubble, then we would not be the business that we are today. We understand the market, we understand what our customers need and that ultimately is what the thing, you know, you can't run a business on government funding for EPA.
You actually need to meet your customers' needs and be a supplier of choice and we understand what are the policy settings that we want from government to make this a proper functioning market into the future. Scott, long answer, short answer is what we said when we asked you to sign a check stands.
I'm smiling and nodding with you. Thank you very much for that.
Okay, I see that it's 12:03 P.M. so I'm not sure. Maggie, how many?
One last question from Matthew is a follow-up. Would you like to take it?
Okay. Yep, sure. We have.
Matthew, please go ahead.
Thanks. Yeah, just a question on the Noveon MOU, was the intention there just to sell more rare earths to Noveon, or is it actually to get involved more like JS Link and get involved in the entire magnet factory and the profits therefrom.
You know what, Chris Jenney, who's our Head of Sales and Market Development, is on live and he is working very closely with Noveon. I'm going to let him answer that question.
Thanks, Amanda. Hi, Matthew.
Great question.
Yeah, it's early days.
Novion, a fantastic operator. They're the only existing magnet supplier into the U.S. with very aggressive growth plans. We're working through them to determine what is the best model not just for commercial customers but also defense customers. We'll keep you updated as we progress.
Matthew, we will sell more product and we potentially will engage directly in how to support the aggressive growth plans that Chris has articulated.
All right. Thanks very much.
Thank you.
Thank you, Amanda. We have no more questions.
Thank you all for joining us. You know, the rare earth market continues to be an exciting place to operate. Yeah, look forward to catching up with all of you in the near future.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.