Operator: Good day, and thank you for standing by. Welcome to Lynas' quarterly results briefing. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the call over to Lynas. Please go ahead.

Unidentified Company Representative: Good morning, and welcome to the Lynas Rare Earths' Investor Briefing for the March 2025 quarter. Today's briefing will be presented by Amanda Lacaze, CEO and Managing Director; and joining Amanda are Gaudenz Sturzenegger, Chief Financial Officer; Pol Le Roux, Chief Operating Officer; Sarah Leonard, General Counsel and Company Secretary; and Daniel Havas, VP, Strategy and Investor Relations. I'll now hand over to Amanda to begin the briefing. Please go ahead, Amanda.

Amanda Lacaze: Good morning, everybody. As always, thank you for joining us, and thank you for being interested in our business, which we make up and think about from the moment we wake up every day, but I'm sure it is something which is not necessarily on your agendas on a daily basis. I guess, today, everyone will want to talk about the actions of various governments globally and their impact on the market dynamics, for the rare earth market rather than some of the more specific actions and developments at Lynas. So with that in mind, I would just say that, most of you who have spoken with me or being with me at these calls previously would know that as I have said many times before, the most important feature of any business' success is the development of sustainable competitive advantage. Developing sustainable competitive advantage allows the business to survive, indeed, even to flourish even with difficult market dynamics. And even the most casual observer would know that the rare earth's market can be difficult, marked as it is by low-cost competition, concentrated supply chains, a fairly changed resistant to customers some of whom seem to think that if they cross their fingers and wish hard enough that everything will be okay and of course, the geopolitical posturing and actions of various governments. But the rare earth market is also like most others, market leaders are the most efficient producers, lead industry technically and offer differentiated products and services. So at Lynas, we continue to focus on building our competitive advantage while everything around us is thrown up in the air like a pack of cards. And I am really pleased to be able to announce today that we have our first product, the small quantity of holmium concentrate, which has been produced from our new heavy rare earth separation circuit, with the all-important dysprosium oxide, the terbium oxide to be produced this quarter. In the context of the current restrictions on heavy rare earth exports from China, this is an incredibly important step forward. Our sales team has been engaging with customers per month to develop the sales plan that delivers best returns for Lynas. Now often when people are talking about rare earth and heavies in particular, the focus is on magnet. But it's important to note that dysprosium and terbium are also used in other applications, including, for example, the micro capacitor market which is considerably less price sensitive than the magnet market. It is the job of our sales team to finalize our best sales portfolio optimized to provide best return to the company. Suffice to say, demand for these materials significantly outstrips our current capacity, and we are already assessing options to further increase output alongside continued development of our U.S. project. So Lynas' performance during the quarter was very much in line with market conditions. And we continue to manage our production ramp up carefully in a market where the U.S. and Chinese government actions are both presenting challenges to our business. However, having said that, the current market dynamics offer the best chance for a sustainable reset of the market as customers are forced to deal with the realized supply risk of magnets from China. As noted in the report, magnets containing heavy rare earths are not being exported from China at present and the 2-way flow of materials, including feedstock from the U.S. into China has ceased. In terms of our own progress towards the Lynas 2025 run rate, our approach remains to work to prove capacity but not to continue production at rates ahead of demand. As noted in our report, Mt Weld operations and the Mt Weld expansion project are both in excellent shape, performing at or ahead of expectations. Our Kalgoorlie facility is continuing to improve, and you will note that we transitioned the cost from the capital account to the operating account from February this year. And our performance at the Lynas Malaysia facility in Kuantan continues to improve and really in a very satisfying way with several very complex new circuits coming online, including the front-end receiving and processing of Mixed Rare Earth Carbonate, the new flow sheet for separation of NdPr, which has given us sort of the uplift in capacity. And of course, importantly, as noted earlier, the new Heavy Rare Earth separation circuit. As we note in the report, the U.S. project is awaiting finalization of a further cost review. This is driven by a combination of new design to accommodate some of the wastewater permitting challenges that we're facing at the selected site, but also importantly, by the effect of the tariffs, which have been applied in -- particularly in U.S. and Chinese jurisdictions. I think as all of our shareholders know, we are risk-averse on this project and are not inclined to take cost inflation risk. Of course, if we see real progress on downstream development in the U.S. and/or Europe, that may change. But for now and the immediate future, the nucleus of the rare earth market remains in East and Southeast Asia. And we, at Lynas, are strong because we operate in this geography and we operate with a strong, with now a strong and supportive relationship with the Malaysian government. We will continue to build our competitive advantage. We operate at the bottom of the cost curve. We are bringing new products and applications online. We have strong customer relationships, which are built on our proven, not planned, track record as a reliable supplier of quality product. And we have a skilled, capable and committed team of people who are dedicated to ensuring the success of the Lynas business. So with those as opening comments, I will leave as much time as possible to take questions because I am sure there are many.

Operator: [Operator Instructions] First question comes from Chen Jiang from Bank of America.

Chen Jiang: Congratulations on the commencement of the Heavy Rare Earth oxide separation. I think it's a perfect time after China put the export restrictions earlier April this month. Just two questions from me on the Heavy Rare Earth oxide. So firstly, on pricing. You mentioned a couple of times, a strong demand ex China. But just wondering if you can share any insights how would the pricing work for Dy and Tb? Does your customer use China DyTb as a reference? And then our premium on top of China's index or for China index doesn't matter for heavy and your customer will pay whatever price you ask? Any color on the pricing you can share, that will be much appreciated?

Amanda Lacaze: Thanks, Chen. So there are various different models as we've discussed many times. And depending upon the sector into which we're selling, different customers will seek a different pricing methodology. Now it has been absolutely normal to have a reference to the inside China price. At present, where there is no material being exported from China because of the ban on exports of Heavy Rare Earth materials. That price is no longer a relevant price. So our discussions with customers are on a more sort of traditional industrial input spaces, which is really identifying and understanding sort of value drivers for both customers and suppliers and ensuring that we agree a price which is beneficial to both. I'm not going to give you anything further on specific segments or specific customers, except to say that we recognize that the material we're producing is scarce outside China, i.e., we're the only ones producing it. And we think that there is significant value attached to that.

Operator: Our next question comes from David Deckelbaum from TD Cowen.

David Deckelbaum: Congrats again on the commissioning of the Heavy Rare Earth separation. Amanda, I am curious maybe if you could just remind the market and walk us through the anticipated ramp in volumes that come out of the separation circuit here. And then as a follow-up to that, this was, I believe, a relatively low capital-intensive project in Malaysia to take the segment that you typically produce and separate it down to the oxides. Is, could there be expansion CapEx in Malaysia? Or would expansion beyond this have to exist in other jurisdictions?

Amanda Lacaze: Thanks, David. Nice to hear from you. So let me take that, the second part of your question. It really sort of probably, it deals with some of the first as well. But certainly, the -- there is nowhere where we can add separation capacity as efficiently or as painlessly as we can do in Malaysia. And it is also close to the primary markets for the material that we produce, whether it goes into magnets or whether it goes into other industries. And so yes, in Malaysia, we have been able to, at very low cost, add this additional circuit. It's -- the tonnages which it will produce are less than market demand outside of China. And so we are assessing what additional capital would be required to further increase production. We're also assessing additional -- I mean I think as everybody knows, is part of our exploration program at Mt Weld. We specifically explored to heavies, and we understand where within our Mt Weld ore body, we can get an increased proportion of heavies. But we are also exploring other opportunities for feedstock, including, I think, very valuably and very prospectively the potential for development of upstream feedstock development in Malaysia. Malaysia has, in some areas, the same sort of ionic clay geology that you see throughout Southeast Asia. And there is an appetite from the Malaysian government to support the development of that upstream asset as well. So that would give us additional feedstock and certainly make a lot of sense for us in terms of increasing processing capacity in Malaysia. With respect to the U.S. facility, it is much more expensive because it is a greenfield facility. We talked about varying capacities there, and we continue to have a conversation with the U.S. government about really what is essential to -- what is essential for the U.S. market and particularly for defense applications and ways that we can do that within sort of the regulatory environment in the U.S. So we're continuing those discussions with the U.S. government at present. And in due course, we will provide a further update.

Operator: Our next question comes from Jonathon Sharp from CLSA.

Jonathon Sharp: Just a question on the CapEx profile for next year. So we know that the expansion is being completed. Can you just give us some detail on how you see CapEx next year on a consensus is around $180 million. We know it is going to come off quite a bit from this year, but can you just elaborate on that and give us some details, please?

Amanda Lacaze: Sure. As you know, we don't give sort of precise guidance on these matters. And some of it will be based upon how much carryover whilst we expect to complete the Mt Weld project in this financial year. Of course, not everything will be bought and paid for by the 30th of June. So there will be some carryover of capital costs associated with that. We think maybe somewhere in the range of sort of $50 million to $60 million will carry over. And the remainder of the capital at present will be sort of our sustaining business as usual CapEx which we would expect to be somewhere in the same sort of vicinity. We will assess any other projects, including things like expanding sort of capacity of heavy rare earths or any other sort of projects will be assessed on an independent basis and we will inform the market as we do that.

Operator: Our next question comes from Paul Young of Goldman Sachs.

Paul Young: Really, unprecedented events in the earth market at the moment, as you know. And so a couple of questions on that. And firstly, I know you spoke a lot about the heavy rare earth pricing and offtake, but I'm actually curious about what happens in the NdPr market. And a couple of things. Firstly, I mean, not all your product goes directly to Japanese offtake or should I say, facilities in Japan. So are you still able to actually sell all your NdPr oxide into those Japanese magna producers at that facilities in China? And then I guess, second part to that is around your comments around that at the moment, there's an opportunity for sustained market restructure. I gather that probably also means an NdPr. And there's about 6 magnet facilities being built outside of Japan and China. So that we are seeing quite a rapid development and rollout of magnet facilities across in particular, Europe and the U.S. So I'm just curious about your -- any sort of initial, I don't know, we're speaking this a long time over the last, a lot, I should say, over the last 5 years, but any comments around potential for you to actually sign NdPr with ex Japanese magnet facilities?

Amanda Lacaze: Yes. Good questions, Paul, as I would expect from the boy. Anyway, can we sell everything we produce? Yes, we can. There are no constraints on us selling into China in addition to selling to Japan. We have a number of contracts which are direct contracts with magnet buyers as well as our contracts with magnet makers. Having said that, the market is difficult at present because we do have the situation where there are no magnets coming out of China yet industry is yet to feel the real pain for that because there is a fair bit of -- everyone sort of following the last rare earth carries sort of a reasonable level of inventory. Having said that, we are very actively engaged with a number of prospective magnet makers. We would not think that all 5 or 6 of the projects that you referenced will actually end up coming to market, but we do think that there are a number that will come to market, and we are actively engaged with each of those magnifiers. We're also actively engaged with the Japanese -- sorry, magnet makers, with Japanese magnet makers as they seek to engage with magnifiers having now sort of really the -- as I say, the Black Swan event has materialized. And so some of the magnifiers who seem to have thought that if they kept their fingers crossed, everything would be all right are now seeing that they definitely do need to take a risk-based approach to their procurement of rare earth materials. It won't happen overnight. It is something which we are -- and it's not a new engagement. As I said, we've always had some sort of contracts with magnet buyers which operate independently of the magnet maker that they may choose. So we would think that, yes, there is the opportunity for a sustained price reset. We think it is very difficult just now when you have the magnet industry in China basically looking at a situation where they can't export their materials, so reliant upon domestic consumption. But we do see this as a -- as the best opportunity we've had for some time with really resetting rare earth's pricing at a level which properly reflects the importance of the material in finished goods.

Operator: The next question comes from Austin Yun of Macquarie.

Austin Yun: Just one question from me. As you mentioned at the call, you will continue to feel the market condition and the demand from the customers. Given what has happened and unfolding in the last couple of months, do you see high demand from your customer base already? Any changes in the inventory management or purchasing behavior? Any color you can share, that will be much appreciated.

Amanda Lacaze: So I think that we -- Austin, yes, we have seen an increase in an inbound inquiry that would not surprise anybody. As various customers and depending upon which segment they operate in, various customers are seeking to secure demand, and so we are engaging with each of those customers on an individual basis and reaching out to others that we think would benefit, as I said, from taking a more risk-based approach to their procurement strategy, which means paying up risk premium for secure supply.

Operator: Next question comes from Daniel Morgan of Barrenjoey.

Daniel Morgan: It seems, obviously, it's a very strategic and-odd time in the market. And I just wonder how it's best for you to be running your business to capitalize on this, never waste a crisis sort of situation. So how do you plan to be running your throughput in the months ahead? I mean your China customers would presumably that the magnet makers, they would presumably not have as much demand as they would normally have? And so is it in your interest to not ramp up very quickly in the next few months?

Amanda Lacaze: It is in our interest to carefully manage -- and thanks for the question, Daniel. You are absolutely on the money. There is no point in us sort of ramping up to 10,500 tonnes with that sort of a clear pathway to get best return on that production. And right now, that means that we need to take the time to agree the new commercial arrangements with various different prospective customers because as I think everyone who tracks the Asian metal price of NdPr would know that the reduction in demand to the Chinese material because it's not leaving the Chinese ports is seeing a softening of prices for NdPr. We expect that will be -- that will start to recover. But our view on this is that the last thing that we need to do is to sort of produce huge quantities of material, which either find a home in our warehouse or finds a home at a lower price elsewhere. And so taking our time to get full advantage out of this crisis is absolutely our #1 priority.

Operator: Our next question comes from the line of Reg Spencer from Canaccord.

Reg Spencer: Just a question on your reference in your quarterly about more conversations with potential customers for direct contracting. I was just wondering if you are able to comment about -- probably, well, most definitely in general terms, about how these customers might be thinking about changes to supply chains and sourcing given that today, there is still relatively limited manufacturing capacity ex China? So do these customers they start, will they look at direct purchasing volumes, tolling arrangements? Because, for example, I look at GM reportedly buying magnets from MP, would auto OEMs, for example, go direct to a rare earth producers such as yourself to secure volumes?

Amanda Lacaze: Yes. And we've done some of that. I guess in priority order, we certainly have many discussions with various defense contractors particularly in the U.S. and having material available as they completely reconfigure their supply chains to be non-Chinese ahead of the DFAS regulation. So this is something which has been on track for some time but now has some added urgency. We have, over time, had direct contracts with both OEMs and with Tier 1 suppliers to OEMs, including, in particular, high-performance motor manufacturers. We expect to do more of that. We also, as I said, are engaged very actively with magnet makers as they sort of approach the market. We think that -- non-Chinese magnet makers. We think that working in partnership with them to make a compelling asset customers is probably the most prospective approach in a lot of ways. So we're doing this for a number of different mechanisms. Some are direct and some are in partnership with magnet makers, but I come back to, really, it's got to be getting that whole supply chain working together, which matters. Of course, in due course, we would expect that the Chinese will -- new licensing regime will settle down, and it may be that our contract with, say, a European OEM may see our product being delivered into China, again, sometime in the future to a Chinese magnet maker, but right now, that's not a pathway which is available.

Operator: Our next question comes from the line of Shannon Sinha from Morgan Stanley.

Shannon Sinha: Just a question about how you could increase your heavy rare earth output. So I was wondering if there's any way you can switch production from NdPr towards heavies given that heavies demand perhaps is a bit greater, ex China and you can get a better price perhaps for heavies than you can for NdPr. So if that's a possibility at Malaysia or is that limited by the amount of heavies that you can produce from Mt Weld at the moment?

Amanda Lacaze: Thanks, Shannon. Yes, Mother Nature determines the proportion in which we can produce NdPr and Dy at present. No, we can't just switch an NdPr circuit into a DyTb circuit. But we can, and we do have opportunities to consider increasing our heavies output in Malaysia, but it will require some further investment. And as I said, we continue to work with alternate suppliers potentially of heavy rare earth feedstock, and we expect that we will, with time, be able to produce more heavies from our Malaysian facility.

Operator: Next up, we have the questions from the line of Al Harvey from JPMorgan.

Al Harvey: Just following up on your earlier comments, I just wanted to see if you could speak to what you're hearing from customers around magnet and heavy rare earth inventories. And I suppose if you're fielding concerns around how the market can function with our access to China heavies in the medium term, given you're really the only ex-China producer?

Amanda Lacaze: Yes. Well, we can satisfy despite what some people sort of seem to think. The West is not short resource, Lynas can satisfy western demand for NdPr. And we stand poised to be able to do that. With respect to inventories, I can tell you that inventories range on different products from maybe as low as 3 months forward cover to 2 years on some of the lower-volume materials. So it's -- we have the time to get this right and to make sure that customers are appropriately valuing the benefit of having a diverse supply chain.

Operator: Our next question comes from the line of Regan Burrows from Bell Potter.

Regan Burrows: Just on the DyTb. I mean historically, you said that going down this path wasn't necessarily about expanding margin. It's more so about providing a broader product offering suite to your customers. Has that thinking sort of changed? And I guess sort of looking forward over the -- as you start producing those volumes, what's the qualification pathway or process in order to turn those material into sales and revenue?

Amanda Lacaze: So I've probably never intended to be quite that definitive. I mean we are happy to take $1 in margin on any product that we produce. So certainly, there is value to be had from being able to sell in sort of magnet proportions. However, as I said, these materials are used in other sectors as well, certainly, which are less price-sensitive than the magnet sector. Look, we see that there is value in both. With respect to qualification, material qualification process for materials that go into magnets is relatively short. With this quarter's production, we will have sort of production samples for various customers to be able to test. For things like as I mentioned the micro capacitor market, qualification will take a little longer, but we're very confident about the quality of the material that we're producing. And we will elect how much we allocate to each of these segments on a margin basis basically.

Operator: Next question is from Mitch Ryan from Jefferies.

Mitch Ryan: Clearly, geopolitical is a key focus, but I wanted to move to operations. Just if you could give us some more color around Kalgoorlie. During the quarter, how was the MREP quality? How's that been -- has the facility been performing and then how's the product quality?

Amanda Lacaze: Yes. So as with all facilities, it's presented us with some expected challenges and also some unexpected challenges. Having said that, there we measure about -- sorry about that. I think that we measure -- Pol, you'll be able to tell me, I think about 8 different measures on quality, with the most important ones being things like the particle size -- clearly, the amount of NdPr and moisture and then impurities in the material and particle size. Those are the sort of categories that we're talking about. We are improving on all of those. We have one which is sulfate, where we are implementing a new, which is an impurity where we are implementing a new process to reduce that significantly from where it has been previously, which will absolutely improve its processability in Malaysia. So I guess I would say that we are pleased that -- I don't know it's an understatement, we're certainly pleased that we have excess capacity in the cracking and leaching stage of our process because we are able to operate our Malaysian facility alongside Kalgoorlie. And that has given us the opportunity to approach the ramp-up at Kalgoorlie in a very controlled fashion. But we are pleased with the improvements being delivered, but we have a couple more, which we think will be sort of step changes in performance and we'll be very pleased when we bank those.

Operator: Our next question comes from Dim Ariyasinghe from UBS.

Dim Ariyasinghe: Congrats on the rare earth separation progress. Just one for me on the Section 232 investigation. Just wondering if you had any views yourself on what could come out of these investigations just given your existing relationship with the U.S. government, you've got a pretty unique or advantaged viewpoint. If you could maybe talk to that, please?

Amanda Lacaze: Daniel, are you up to talking about that -- Daniel is not feeling 100% at present, but if he is, I might get him to address that.

Dim Ariyasinghe: Sure. No problem at all. There was a Section 232 down about 3 years ago in a similar form, and we provided a submission towards that, as you would expect, and we are looking to provide another submission for this one. However, in real terms, the conversation has not changed significantly from when we submitted the last submission back to the U.S. government under the previous administration. So there's still some ambiguity, I guess, as to what they're trying to achieve with it, but we are talking to the U.S. government about what we need to put into that submission to make sure we get the best outcomes from it.

Operator: I'll now have -- we have the follow-up questions from Jonathon Sharp from CLSA.

Jonathon Sharp: Just a quick one on the proportion of NdPr, that increased quite a bit this period. Do you expect this is proportion to be sustained? Or do you think it will return to roughly sort of 50-50 products split there?

Amanda Lacaze: Once again, that just really reflects the market. It reflects the market for lanthanum and cerium as opposed to reflecting the market for NdPr. So the price for much of the lanthanum and cerium sort of on a -- I sort of hesitate to the term but standard lanthanum and cerium is below the cost to process it. So we focus on only producing the lanthanum and cerium for which we are able to achieve premium based upon sort of improved specification. And we have seen some slight improvement in lanthanum and cerium pricing over the past sort of month or so, but we will return to producing more of that material, but not necessarily in the proportion that Mother Nature offers it to us. Well, it's -- it will simply be on the basis, Jonathon, and it would just be on the basis of market demand and market price.

Operator: Next question is from Paul Young of Goldman Sachs.

Paul Young: Another follow-up question on NdPr pricing and relates to ex-China pricing. Firstly, to note the demand for magnets is growing really strongly and my understanding is double-digit at the moment globally and prices for NdPr have bottomed. So just curious around the potential to place your ex-Japanese, I guess, offtake with other producers. And actually, how we think about -- could we think about the price of NdPr ex the Asian Metals. Index. And I think that probably the question is the fact that the cost of production outside of China for magnets is probably 20%, 30%, 40% higher than what the Chinese can produce that. So if an OEM wants to contract with you directly, how would that potentially the pricing work? Would they have to maybe underpin the margin for that magnet producer to stay in business?

Amanda Lacaze: Yes, it will vary. I think that the first thing is that whilst we all seem to have a price which operates independently of the largest rare earth price in the world -- market in the world, which is China, the simple fact is producers of the finished goods, whether a vehicle or a phone or a wind turbine are still operating in a competitive market. And so I'm not gleefully saying, well, let's pay more for our inputs. And if you said that, that difference can be significant. On the other hand, our view is that singular supply chains are never healthy, and we certainly seek to make sure that for all of our major inputs, we have more than 1 supplier even if the second supplier is at a higher price than the primary supplier. So our view would be that for a lot of the non-Chinese customers, the sensible thing would be for them to contract a portion of their requirements. And if that comes at a price premium well, so be it, but they're basically paying a risk premium for making sure that their production lines don't stop. So for us, to your point, magnet makers are more expensive, not because of the raw material. They're more expensive for a whole variety of other reasons, but it's another reason why, as I said, we will work in partnership with magnet makers to approach the market and make sure that magnet buyers understand the benefit. Over time, the most desirable outcome will be is the Chinese price lifts because then it will become sort of sustainable pricing at a higher level because we'll all be on a level playing field. And that's not beyond sort of potential pathway for this market going forward because certainly, the consolidated rare earths players in China, whilst the state-owned, do seek to deliver profitable performance as well.

Operator: We have a follow-up questions from Austin Yun of Macquarie.

Austin Yun: Just you talked about the feedstock expansion looking at Malaysia. Have you thought about moving along the value chain to the downstream, do you see any opportunities to unlock value there and even potentially give you more pricing power on your product?

Amanda Lacaze: Yes. Obviously, we've thought about it a lot. I think that it's important to note that it's easy to write in a PowerPoint presentation. It's sort of harder to execute. I think Pol, who's been in the rare earths market longer than any of the rest of us in Lynas would say, I think he said the first time he saw a PowerPoint presentation talking about this was in about 1999, and no one has executed successfully on it in that time. Why? Because the skills required for minerals processing for running a big chemical plant of the sort that we run for our processing are quite different from the materials science, which is attached to a magnet. So we think that the best way for us to participate will be via partnerships. Now at some stage rather, they may be equity partnerships or they may simply be strategic alliances. But partnering with skilled and capable metal and magnet makers, we think, is a better pathway than striking off on our own.

Operator: Next, we also have a follow-up question from Daniel Morgan of Barrenjoey.

Daniel Morgan: Amanda, just maybe talking about your U.S. plants. There's obviously a lot to talk about with your U.S. partners, operating costs, CapEx, permitting. Could you expand on when you would hope or expect to see FID on the U.S. project, if at all? And I would imagine or expect there'd be some urgency for U.S. government action here or perhaps not? Can you let us know?

Amanda Lacaze: So just in terms of urgency, I mean we have -- we are very actively involved with the defense industry to ensure that the U.S. defense industry is not exposed at this time with or without a facility in the U.S. And I think that, that makes us an important and valuable player as far as the U.S. government is concerned, even absent all the other things that we've talked about. The finalization of the plant had reached a stage where we had a final design. We had bought the land. We had the final design. We were ready to go. And these issues around the water permitting have become just an additional challenge. We have a new process, which we propose to implement, which will see us deal with those. But it does come at a greater cost. And the U.S. government at present has quite a lot of issues on their plate and not all decision-making positions have been filled because as you would understand, there's sort of Senate confirmation processes and otherwise. So we are working actively. We are -- we have actually a weekly call. We're working very actively on resolving this. But as with most things, I hesitate to predict what decisions any government might make and when.

Operator: Our next follow-up question is from Chen Jiang of Bank of America.

Chen Jiang: Okay. Just on the follow-up on the U.S. plants, in the report flagged additional CapEx. I guess given the whole heavy rare earth project is fully funded by the U.S. Department of Defense, is it fair to say whatever additional CapEx required, the U.S. Department of Defense will cover them or they will reimburse you because like they can't get heavy rare earth for military use from China going forward? Is that a fair assumption? And also, yes -- sorry, and also rather than talking about the FID for the project, are you be able to expedite the construction for the project given the urgency?

Amanda Lacaze: Yes. So in response to the second question, I mean, given sort of this extra time, our team has had time to really review and fine-tune and continues to do so sort of how we will execute the project. And so you don't waste the extra time that you've got available and our team certainly has not wasted the extra time that they have available for thinking about this and how do we execute in a timely fashion. With respect to the whether the U.S. government picks up the tab, I mean that's the conversation we're having with the U.S. government about what's the size of that additional requirement. As I have always said, it's not a project on which we will risk our balance sheet. There is a certain amount of face that there will be development of downstream industry. But for us, a dollar spent in Malaysia today can give us a bigger return. So it's the conversation we're having with the U.S. government. It doesn't affect our ability certainly in the short term to be able to meet the market in a way that is beneficial for our customers.

Operator: Our next follow-up question comes from Al Harvey from JPMorgan.

Al Harvey: Amanda, just a follow-up on my earlier question and sorry to labor the point. I appreciate the West is not short on NdPr for ex-Chinese. But I suppose given they are responsible for nearly all the heavies production. I suppose the question I'm really trying to answer and hope you have a view on is whether the West can satisfy the ex-China heavy demand. I mean, I suppose within that context of the upper limit time frame you mentioned on inventories that the West might hold of around 2 years. Within that time frame, can the West satisfy heavies demand?

Amanda Lacaze: Sure. I think we can. I don't think we need -- I mean, I think that what we need to do is that there are 2 or 3 potential feedstocks that we need to look at ensuring that they come online appropriately. But in terms of the ability to process those materials with confidence, we can certainly sort of do that. So yes, I'm -- I don't think that this is beyond the width of the West to be able to solve for it. It's just a case of we're the only ones who know how to do it outside of China. And for various reasons, it hadn't made it to the top of our capital list until fairly -- until recently. But now that it's there and now that there are prospective additional feedstocks available to us, yes, certainly, I think that we can in due course, ramp up our production.

Operator: Our last question comes from Regan Burrows from Bell Potter.

Regan Burrows: Just on Kalgoorlie, obviously, you guys stopped capitalizing the cost there in February. Just concerning was that beginning of February or end of February? And I guess with your guidance of saying you're going to ramp up sort of in line, given that Kalgoorlie's sort of seen as a higher cost plant, does that mean you're putting more material through Malaysia? And how should we think about that ramp-up process for Kalgoorlie?

Amanda Lacaze: Yes. So Gaudenz, correct me if I'm not -- wrong, but I think it was at the beginning of February. And bear in mind, it's the fixed, it's only the fixed cost, the variable costs have been running through the P&L because we have been producing material. The balance between Kalgoorlie and Malaysia on a cost basis. We -- it's tilted clearly towards Malaysia. On the other hand, we need to run at a certain rate -- any plant of this sort needs to run at a certain rate to ensure that we capture efficiencies. The team is looking at the best operating rhythm to having Kalgoorlie, whether it is 24/7 operation or whether there is sort of some sort of different sort of operating rhythm that might work better in terms of our ability to capture efficiencies, but not overproduce. So we're working on that at present. I mean, as we said, our first task was to get the plant working as designed and then to optimize and that optimization comes partially from what's our operating format and also from really addressing some of the costs which are associated with Kalgoorlie, which I am confident we will be able to bring down over time.

Operator: That's the end of the question-and-answer session. I would like to hand the call back to management for closing.

Amanda Lacaze: Thank you. Thank you all for your questions. Chen always prepares me very well for Q&A. She comes up with all of these questions that she thinks that you might ask. You probably asked about 40% of the questions that Chen came up with. So she is a much better interrogator. I think I've decided. But thank you all. No doubt, you will be in touch with Daniel, if you've got any further follow-up questions. And we look forward to an excellent fourth quarter.

Operator: Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.