Lynas Rare Earths Ltd

ASX:LYC

Earnings Call Transcript 2022-Q4

[Operator]

Good day, and thank you for standing by. Welcome to the Lynas Rare Earths’ quarterly results briefing. [Operator Instructions]

I would now like to hand the call over to Lynas Rare Earths. Please go ahead.

[Jennifer Parker, Investor Relations]

Good morning, and welcome to the Lynas Rare Earths quarterly investor briefing for the quarter ending 30 June 2022. Today's briefing will be presented by Amanda Lacaze, CEO and Managing Director. And joining Amanda are Gaudenz Sturzenegger, CFO; and Sarah Leonard, General Counsel and Company Secretary.

I'll now hand over to Amanda.

[Amanda Lacaze, Managing Director and CEO]

Thanks, Jen. Good morning, everybody. I have the benefit of seeing how many people are on the call, and we've just about cracked with a ton again. So clearly, people are interested in -- on a Monday morning in what's going on at Lynas.

So of course, what a great year. This is the last quarter of what's been an excellent year. And as you look at the report and see the sort of the evolution from the first quarter through to the fourth quarter, you can see that. About $950 million in sales and, of course, just for everybody, I want you to know that these are unaudited sales results. We will put those through when we put out the full year results.

But nonetheless, about $950 million in sales and finished the year with $965 million in cash whilst sort of spending quite a bit of money on our growth projects through the quarter. This does set us up excellently for ongoing growth projects as we seek to ensure that we grow at a minimum with the market in the years to come. And of course, during the quarter, we had the small triumph of the U.S. project, the award for the Phase 2 to Phase 4 of the HRE funding, the first Heavy Rare Earths separation plant outside of China that has been built in many years.

As the report states, we were a little disappointed with our production outcomes. We started the quarter really with the wind behind us and with a great deal of confidence. Water, which, pun intended, has been bubbling away in the background as an issue in Malaysia for several years, really created a lot of challenges for us this quarter. The team there has really demonstrated their very best can-do attitude as far as water is concerned. Those who've been with us for a while will remember about 3 or 4 years ago, we built another process water plant so we have the ability to have a lot of storage on site.

We also have run pipes to some local sort of storage -- water storage locations, and we've put in water treatment solutions to ensure that we can use those in our production process. But this quarter's outages were so significant that they did actually cause us to have to shut down production on more than one occasion.

The team, once again, now, with their fabulous can-do attitude has really been looking at, and this is part of our sustainability program anyway, how can we continuously reduce the amount of water that we use so that this is no longer such a risk in the business. And we are, this month, implementing a new change, which has the objective of reducing our water consumption by about 40%. So hopefully, that will give us further protection. But frankly, it's -- there's no water coming through the pipes, and there's no water coming out of the sky. It can be very difficult even with the best recycling technologies in place.

Having said that, still an excellent outcome in terms of production. It was only some 90 tonnes less than last quarter when last quarter was our record, and price continued to hold up despite some of the inside China market dynamics. Of course, with all minerals companies, there's a lot of discussion at present about what's going on with costs and input costs, in particular. And we have not been immune to these as you will see. Some of our costs have gone up by up to -- I think one of them went up by about 70%.

But on average, about 20% increase in our chemical reagents that we use in the process. And that just once again reinvigorates all of our initiatives, which are targeted at improving efficient use of chemicals. And the team is working on at various different projects, including opportunities to recycle chemicals within the process once again to ensure that we keep our muscle in terms of cost and don't just sort of get thrown around with some of those cost increases. Having said that, recently, we've seen some moderation of that. And so we hope that, that will continue.

So the growth projects. Well, Kalgoorlie, been there several times during the quarter. The fabulous service that is offered these days by the airlines for me, actually sleep there with half a dozen of my colleagues and another 120 of my closest friends that was in the Kalgoorlie airport terminal, I wouldn't really recommend that. It's not the most comfortable of places to spend an evening, but it was still worth it to see our site and to see our site as it's developing.

And I know that some of the people on the call today will be at Diggers & Dealers in a couple of weeks' time. We will be running bus tours. People won't be able to get off the buses on site because we've got a lot of people doing a lot of work there at present, but it's really exciting. I happened to be there one of the days when we were lifting one of the kiln pieces into place, and that was pretty exciting. We've now got all 5 of them in place.

The kiln has been rotated for the first time. The welding process is on foot. And we have -- just every time I'm there, and I've been there sort of maybe only 10 days apart at different times during the quarter, I can see a difference.

So we have shared, for those who won't have a chance to see it, some photos at the site. So you can see just sort of how much progress is being made. The big process water tank there, it was pretty exciting to see that as it was constructed and lifted for each phase. So things are moving along very smartly in Kalgoorlie. And of course, as I've indicated this before, the U.S. award of the Phase 2 to Phase 4 for the Heavy Rare Earths is very exciting for our company, and we look forward to moving that project along.

So really, a very good year. We're excited to be entering the new financial year. The market continues to evidence significant growth. We're seeing accelerated uptake of many of the technologies in which Rare Earths are essential including, of course, the famous electric vehicles, but also wind, automation and electronics. And as I said before, our challenge is to grow as fast as the market is growing.

And you can see some of the projects that we're doing to be able to underpin our ability to continue to serve the increased demand of the customers we have today and the firms who would like to be customers of Lynas in the future.

So with that, I'm very happy to take any questions.

[Operator]

[Operator Instructions] First question comes from the line of David Deckelbaum from Cowen.

[David Deckelbaum, Cowen]

I wanted to talk about just the water consumption tweaks in Malaysia. Can you just talk through, it seems like you've experienced this issue in the past. Why wouldn't have this initiative been undertaken sooner? And is there a trade-off that you anticipate with operations on selling sort of total REO concentrate versus the NdPr? Because certainly, the NdPr volumes held up relatively well in this quarter.

[Amanda Lacaze, Managing Director and CEO]

Yes. So this has -- been various iterations of these challenges, and we've done a lot of -- we've implemented a lot of initiatives to improve our ability to withstand some of the changes from the local water supplier way, way, way back when I -- relatively early when I was living in Malaysia. It was the first time we had a water outage in Kuantan, and it was not just industrial, it was residential as well. And I was sort of looking around thinking, gosh, can I get buckets of water out of the swimming pools to put into the toilet systems? And then discovered that, in fact, there was a tank -- water storage tank in the ceiling, which is pretty common. So that just gives you a sense for the fact that people have an expectation that there may be outages.

They have varied, the reasons for the outages, through -- from dikes collapsing in the dams or pumps not working as efficiently as they could do. There's always another reason for it. But the outcome is that for someone who uses a lot of water as we do, it's very challenging. We have 3 very large process water storage plants on site. The third was built in, I think, it was 2017 after we'd had a previous really sort of challenging period. As well as that, there were some disused pits sort of close to the plant, and we've set up pipes from there so that we can bring in water from those areas as well.

So why didn't we put the recycle in previously? Well, it's just part of an ongoing schedule of improvements that we have. It's a little more complex than running a pipe from a local sort of water catchment area. And so the team has been working on it for some time, and it's being executed actually this month. So we expect that, that should be an excellent outcome for us.

But still, as I said, when the supply is as disrupted to them at times, almost nothing coming down the pipe, it is challenging to be able to respond to that.

And you're right, absolutely, we have prioritized -- when we are sort of limited on water, when we're rationing out, we absolutely have prioritized the NdPr production rather than the other materials. So we prioritize NdPr. Secondarily, we prioritize the SEG that we produce and then the lanthanum and the cerium after that.

[David Deckelbaum, Cowen]

I appreciate that, Amanda. And so I guess, would it stand to reason that we would see an inordinately high number of REO produced in the subsequent quarter? Or should things just be normalizing as this new process is instituted?

[Amanda Lacaze, Managing Director and CEO]

No. We won't see an inordinately high production because we have other constraints on the amount that we can produce downstream for our lanthanum and cerium materials, even if we've got it all coming from the upstream SX into product finishing. There is a ceiling on the amount that we can precipitate and either produces a carbonate or an oxide.

[Operator]

[Operator Instructions] The next question comes from the line of David -- Daniel Morgan from Barrenjoey.

[Daniel Morgan, Barrenjoey]

You did spend a little bit of time talking about growth. And in your report, you outlined that you expect the market to perhaps double over 10 years to 2030. If you were to outline further growth, can you just talk about the bottlenecks in your Lynas 2025 footprint you will have and where might you think about investing? Is it mostly you'll need to invest in Mt Weld? Is there surplus capacity that is being built in Kalgoorlie? Might you invest further in the U.S.?

[Amanda Lacaze, Managing Director and CEO]

Thanks, Daniel. Yes, we are very well progressed and we'll provide more detail on this as we move through. But yes, we are -- as we identified, I think all the way back in 2019, the next step-up, significant step-up in capacity is not a debottlenecking task primarily, it is a -- we actually have to make some substantive steps.

So Mt Weld certainly -- continuing to explore the Mt Weld ore body is important. We have more than 25-year mine life at present, and we have excellent prospectivity for increasing that mine life. Last week -- wait, before last, I was at Mt Weld and walking along the bottom of the pit, sort of looking at some of the different areas and what we know about sort of the grade of the material. So yes, we will be making investments in exploration and processing at Mt Weld as we move through the ore body.

Yes, we've got the uplift that we get out of Kalgoorlie. And yes, we will be looking at opportunities to further develop our existing facility in Malaysia. And also, the U.S. investment is pure growth.

[Daniel Morgan, Barrenjoey]

And in any investments, what are the major process or permitting bottlenecks that you might face in the various regions?

[Amanda Lacaze, Managing Director and CEO]

Permits, they really take -- they just take time, right? And we -- I actually talked a little bit about this last week as well. And even at Mt Weld, as we think about now, well, we -- the work that we need to do there requires us to increase our disturbance envelope, and that just takes time. Out at Mt Weld, as you know, you've been there, we don't have a lot of place-name because we don't have any remarkable flora or fauna. But nonetheless, it still just takes time to do the work.

And so we don't see any showstoppers in terms of permitting. We just see that it's a process that maybe takes longer than we think for the benefit and that we are a company that really focuses on sustainability. It's one of our core values. We don't seek to get permits to do things which are going to rape, pillage and plunder. We actually want to do things in a responsible and -- as responsible a fashion as is possible.

So we would like to see more streamlined permitting processes really everywhere. It's not specific to any particular geography in which we operate.

[Daniel Morgan, Barrenjoey]

And the Malaysian press has at times written about that you are seeking to amend the requirement to cease cracking and leaching in Malaysia from time to time. Is this something that is -- you're definitely seeking and on the table? And is there a point at which you have to go, "Okay. Well, that's an opportunity for us," or might then -- might a decision not be made, and you have to go, "Right. Well, we have to expand our footprint without Malaysia helping?"

[Amanda Lacaze, Managing Director and CEO]

So our position has always been that the Malaysian operations have been a bit of a political football. They are maybe the most reviewed industrial operation in Malaysia. There have been 4 separate scientific reviews, none of which have recommended shutting down any parts of the plant. And so -- and indeed, each of those reviews has found that Lynas is compliant with all regulations and that the operations are intrinsically low risk.

So we don't think there is any evidence for the conditions which were applied to the most recent renewal of the license. And we continue to engage with the local regulators on that basis.

[Daniel Morgan, Barrenjoey]

And just a last question on the water issue, which has been an impact during the quarter. Has that -- has the issue of water availability extended into this quarter, i.e., should we expect that the September quarter is still going to be impacted by this? And I imagine that the 40% target you're seeking to reduce freshwater use, that is not a costless thing, i.e., you'd be doing it in the normal course of business if it was. So what is the cost in dollars or efficiencies? Or why haven't you enacted this in the past?

[Amanda Lacaze, Managing Director and CEO]

Why haven't we enacted it is because we have -- it hasn't been the highest priority initiative on site. So as with anything, we can't do everything all at the same time. And so we've had other things where we might -- and even as we talk about water management, where we've been able to get bigger benefits by focusing our methods in those areas, it has been on our to-do list for a little while. And now it is at the top of the to-do list.

Of course, it is beneficial. Any opportunity to recycle, so this is recycling the water, what we're talking about, is clearly going to be -- well, we think about reduce, reuse, recycle. So recycling water or at some time in the future, we're hoping that we'll be able to identify a process where we'll be able to recycle chemicals, for example, is beneficial in the business. So there's no magic to why it wasn't done anytime sooner. It's just been a case of having the resources available to do the work where those resources now have been doing other work that we saw at the time as being higher value add. So really, that's the situation.

Will it continue? Possibly. It's unpredictable. That's the biggest issue, which is why we've put in all of these strategies to mitigate the risk. It's unpredictable. One day, we might be getting 600 cubes an hour, and the next day, we might be getting 50 cubes an hour. So it's the unpredictability which is the challenge. And so that's why we're trying to buffer that with -- as we talk about this over sort of a journey, starting with increased sort of storage on site through to now sort of the greater recycling.

[Operator]

[Operator Instructions] Follow-up questions from David Deckelbaum.

[David Deckelbaum, Cowen]

I'd like just some comments around sort of the market. When you think about the first quarter or in the second quarter -- sorry, or the June quarter, rather, your fourth quarter, obviously, some impacts from COVID-related shutdowns in China, did you get the sense that many of the magnet customers there were sort of destocking inventory levels that they had around NdPr? Do you foresee sort of a pent-up demand scenario as China potentially reopens into the remainder of summer and then into sort of the December quarter there? Or is there -- this is just perhaps a bump, things were normalized, but demand was just at depressed levels? I'm just trying to get a sense if you have any color around the sort of customer inventory levels relative to norms.

[Amanda Lacaze, Managing Director and CEO]

Magnet makers aren't holding a lot of stock, of course, because the price has been as high as it has been over the past 12 months. And so we don't see that as being a risk. The situation in China is that the producers have been able -- sort of the big production areas like even when Baotou was shut down for a couple of weeks, the Northern Rare Earth was able to continue production, bearing in mind that it's got an integrated industrial complex there. I think China continues to be unpredictable for as long as the zero-COVID policy persists.

But generally speaking, demand is strong. And we're not expecting to see there being any reduction in demand growth, particularly not in outside China consumers. And our customers' demand has continued to grow, bearing in mind, as everybody knows, most of our NdPr is sold outside of China. And that demand has continued to be very strong and to grow right through the last year.

And customers are forecasting continued growth. We also have much more interest from magnet buyers in outside China areas, seeking to secure their raw materials. So we see that as a very robust sort of source of growth for the business as we move forward.

[David Deckelbaum, Cowen]

I appreciate the color there. And perhaps just the last one for me, the Lynas 2025 vision, again, congrats on getting the award from the U.S. DoD on the heavies. That's obviously a -- it's not an enormous separation facility, and it sounds like you all plan to colocate the light rare earth separation circuit there as well along the Gulf Coast. But I guess as we think about doubling that production from the 2019 reference level, I know it's in your custom to kind of come to the market when you have something concrete, and you don't necessarily want to get out ahead of your skis.

But when we think about it, do you foresee all of that growth and the ability to match the growth of the market coming all from Mt Weld? Or do you think that there is a requirement to figure out ways to find third-party feedstock?

[Amanda Lacaze, Managing Director and CEO]

We actually have a team, David, whose job it is to assess third-party options. There is nothing available today. And even on the most optimistic of project plans, there's nothing available within the sort of time frame that we're talking about. So we assess the third-party feed options. We have a database. We do test work when we've got to the stage where we've got enough detail or we've got material. Then -- but there's no third-party feedstock available.

However, the additional point on this is that when we have looked at this, and we've looked at other sources, that there is nothing at this time where it is more economically beneficial to source from somewhere other than Mt Weld because the Mt Weld ore body is unique. And its grade and the fact that we're already there sort of puts us well ahead of everything else.

So we're looking at it. We're happy to process. In our new plant configuration, we will be able to accept concentrate, and we will be able to accept mixed rare earth carbonate. But nobody has material available for us to purchase at this time.

[David Deckelbaum, Cowen]

That's helpful color, especially certainly as we think about Mt Weld supporting all these feedstock initiatives globally.

[Operator]

[Operator Instructions] The next question comes from the line of [Jay Collinson].

[Unidentified Analyst]

It's [Jay] from Colorado. Okay. I have a question. I've been reading a little bit about the challenging power grid in Texas. And I mean, it's challenging even by Texas standards.

But it went down last winter, and they had rolling blackouts and so on. And I'm just wondering in the planning of this new facility for both the lights and the heavies, is there going to be some alternative source to mitigate the rolling blackouts and the uncertainty sometimes in the Texas grid, which appears to be getting better?

[Amanda Lacaze, Managing Director and CEO]

[Jay], I can't answer that directly right now. At all of our sites, we are looking at power, and we are looking at the ability to use alternate power sources. As we seek to reduce our emissions intensity over time, certainly, finding renewable sources is a key part. In some instances, they can come off the grid. In other instances, we're going to look -- have to look at sort of site-specific installations to assist.

I'm not close enough right now to some of those issues in Texas. We're still quite a long way from that being sort of a key issue. We're just starting our process of finalizing our -- finalizing sort of the project plan now that we've got approval. And of course, the next step will be the famous permitting process, which will no doubt keep our team very occupied for some time yet.

[Unidentified Analyst]

Okay. Great. Just one other question. The U.S. dollar is getting really strong. I noticed it's on parity with the euro just recently. Does that really affect -- getting $120 million of contract, does that affect it in any way?

[Amanda Lacaze, Managing Director and CEO]

So the -- yes. Sorry, I've just got a message from someone else on the call saying a number of the analysts are trying to register questions and not coming up, so sorry. As we think about the effect of currency, the U.S. dollars grant in the U.S., we will be spending most of that money in U.S. dollars in the U.S.

So the exchange rate is not going to be such a big issue. Having said that, we continue to work with the DoD on what might be any changes in the external environment which may affect the costing or otherwise of this facility.

In terms of the rest of our business, generally speaking, a strong U.S. -- because we've talked about this previously, we operate -- the price of rare earth is truly sort of set in renminbi, even though it's reported in U.S. dollars. And of course, we operate in Malaysian ringgit in Malaysia and Australian dollars in Australia. So we do get a number of natural hedges.

It's -- I don't think in the time that I've been here that all of the currencies have been going in the same direction at the same time. But I think specifically to your U.S. question, it is U.S. dollars in the U.S. So the exchange rate is less relevant.

[Operator]

Questions?

[Amanda Lacaze, Managing Director and CEO]

So we understand people are having trouble actually logging to ask a question. So Jen's telling me --

[Jennifer Parker, Investor Relations]

It seems to be that, unfortunately, the Australian dial-in number is preventing people -- some people from asking questions, so apologies for that. We have been advised that if you dial in with the U.S. number, it will allow it to. But it does seem there's an issue with the Australian dial-in number at the moment.

[Operator]

We do have a questions from the line of Paul Young of Goldman Sachs.

[Paul Young, Goldman Sachs]

Yes. I went through the U.S. number, and now it's working. Amanda, the first question is on this water issue again. I still don't follow as to what is the exact issue on the supply.

Is this a political issue or is it actually an equipment issue with the supplier?

[Amanda Lacaze, Managing Director and CEO]

It's equipment. It's not political. As I said, and it's been a rolling number of issues, our team is working very closely with the suppliers, PAIP, P-A-I-P, not P-I-P-E. Last -- when last I was in Malaysia, about 3 weeks ago, I met with the CEO as well there. He's assured us that the new pumping system, which will be in place in August, will make this a thing of the past.

But we are necessarily cautious in believing that anything will -- that there's a magic solution because we've been dealing with this off and on for, as I said, for at least the last 6 years. And it's a rolling number of issues. It started off -- the first time that there was an issue, one of the berms in the water storage facility collapsed and needed to be replaced. The latest is really to do with the age of the pumping equipment, and it's being replaced.

[Paul Young, Goldman Sachs]

Okay. And then how do you reduce your water consumption by 40% so quickly? Is it the fact that you weren't recycling any of the process water?

[Amanda Lacaze, Managing Director and CEO]

Well, we had some recycled. But yes, this is a significant step-up in recycling in SX. And I will just highlight for everyone that the objective is 40%. It doesn't mean that we'll do that on day one. These changes always, we have to sort of phase them through, and we certainly don't want to create sort of further challenges for ourselves in terms of throughput. But it is really -- when we talk about this, this isn't like just all of a sudden. I mean, we -- because it is upstream SX where we're doing this, it's either going to work really -- well, it will work, we're confident of that. But we did a lot of bench work and tests before we implement -- before implementing this at a plant scale. So we go into it with a relatively high degree of confidence.

[Paul Young, Goldman Sachs]

Yes. Okay. And then back on to Kalgoorlie and just the timing of that project relative to the broader 2025 plan for Lynas. Just an observation, looking at the progress on the project in the quarter, some really good progress in mechanical completion, which is great to see the sort of erection accelerating there. But if I look at it and go, well, I sort of feel like that commissioning by sort of March or June quarter next year producing carbonate is going to be a bit of a stretch.

But then again, extension of the license in Malaysia will allow you more flexibility to potentially increase production beyond the 10,500 tonnes of NdPr. So in my view, you sort of need both anyway. And I think probably the market is coming to that conclusion. So that probably tells me that you need that license extension, but then the political backdrop, and it sounds as though that's probably a realistic outcome. But I guess where am I sort of wrong with that thesis?

[Amanda Lacaze, Managing Director and CEO]

Nothing is in the bank quite yet. So certainly, anything that allows us to continue to use installed assets is beneficial and a high value add for our customers. The world at large continues to question whether we will execute our projects on time. I'll make the point that Lynas is the only non-Chinese producer who has executed its projects on time.

And so we look at the Kalgoorlie facility. We look at our project plan. We look at our ability to execute and get feed on. If we thought that there was a significant gap in that, we, of course, would disclose that to the market.

[Paul Young, Goldman Sachs]

Okay. Great. And then last question for you, Amanda, is on the U.S. Heavy Rare Earths refinery. I'm trying to think how we think about this -- should think about this from the perspective of improvement in realized pricing. And you send the SEG, the heavies to China at the moment. You must be getting a discount because you're not obviously producing the final oxide product. It will be when you build the refinery in the U.S. Probably, costs go up a bit. But from a margin perspective and earnings standpoint, it must be positive. So how do we think about the improvement in realized pricing across the heavies, in particular?

[Amanda Lacaze, Managing Director and CEO]

Yes. Yes, Paul, the thesis is correct. We wouldn't be doing it if we didn't see the thesis is correct. We wouldn't be doing it if we didn't see that we were going to increase our margin. Well, we might be doing it because of -- there will be a margin uplift. The best way for you to think about it is really to think about the costs associated with separation. You can see those in sort of the Chinese pricing really. You can see sort of the ongoing costs associated with heavy rare earth separation, and that gives us a sense of sort of the likely scale of the uplift. But we haven't disclosed a specific number because it also, as you're saying, I mean, we're now in the detailed execution phase, and inputs and a variety of other things in the U.S. are going to affect the finally realized margin. But certainly, we see that there will be an uplift in our heavies contribution.

[Operator]

Next questions will come from the line of Trent Allen from CLSA.

[Trent Allen, CLSA]

Now I just had a question about -- just back on the water again. You might have covered this with Paul while I was dialing back in. But do you have a conceptual CapEx number for those changes? And also, might it increase the OpEx at the LAMP? That's my first question.

[Amanda Lacaze, Managing Director and CEO]

Yes. I know the CapEx. The CapEx number, you will not see it as being remarkable within our CapEx spend. So it's within a normal stay-in-business sort of CapEx allocation. So there's no sort of millions of dollars associated with doing this.

The second thing is, actually, it should reduce our operating costs. But water is not that expensive in Malaysia. So once again, you won't see that as being a significant outcome. The driver for doing this is because it's going to give us more stability in process, not cost.

[Trent Allen, CLSA]

That's cool. I mean, is it reasonable to think -- I mean, it might take a little while to ramp up the way these chemical processes do. Might it be finished sort of by the end of this calendar year or earlier than that?

[Amanda Lacaze, Managing Director and CEO]

It should be. The process should be -- the work required to do this should be completed within this month. And you're right, the uncertainty is always, can you just cut over 100% or do you find yourself with sort of challenges and you have to go back to your previous process while you address those challenges? We've seen that. We see that with any number of initiatives that we do within the business, but that's just part of our normal management and, once again, should be invisible to you and to the market. We just should be managing those as part of our changed management framework.

[Trent Allen, CLSA]

Okay. Also, Paul touched on the Lynas 2025 and your deadlines there. It looks like Kalgoorlie is tracking pretty well. What about the PDF in Malaysia? You've started construction there. Will that be -- you're expecting that to be finished by the deadline next year? And can you remind me of what that is, that time?

[Amanda Lacaze, Managing Director and CEO]

Yes. So the PDF, once again, when I was up there about 3 weeks ago, we -- and with the Board, indeed, we toured the PDF site. Really, progress is going very well. The PDF contractor, we're using a contractor who had done work previously on the Lynas site. So he's very familiar with sort of the design elements, and progress is very good.

And yes, we are tracking absolutely to time line. And the first transfer of material into the PDF is scheduled for late next calendar year.

[Operator]

[Operator Instructions]

[Amanda Lacaze, Managing Director and CEO]

As we're waiting for questions, Jen, because she's so wonderful, always does a Q&A and writes down what she thinks are going to be the really difficult questions that I might be asked and gives me sort of proposed answers. So I'm wondering, since people can't actually get on to ask questions, whether I should ask some of the questions that she put in there. But then I think, well, no, because she only includes the really hard questions.

Sorry, I'm just trying to -- I've got one of the questions that maybe people might be interested to ask is whether the COVID-19 situation in WA and in Malaysia, whether that's having any effect on production.

And in the quarter just passed, of course, in Malaysia, we've had actually very low caseloads. Like with so many places, that's increasing now with the new Omicron variant. And -- but we have really tried and tested safety protocols to look after the health of our people. And they have served us well through the 2 years of the pandemic, and we expect that will be the case moving forward. But we continue to encourage our people to get their boosters.

In WA, once again, we are seeing sort of continuing relatively high caseloads. Once again, we have well-established protocols that are protecting our people on site. And we continue to -- our people voluntarily continue to wear masks in relevant situations, and that really is about ensuring that they're protecting each other as much as it is about protecting themselves. So that was one question I thought that maybe some people would be interested to hear.

But I hear that we have no more questions. I'm hoping that it's not just a technology issue. And for any of the analysts that do have questions that they were unable to ask online, please feel free to drop Jen and/or me a call -- a line, and we will certainly find a way to get back to you today. So thanks, everybody.

[Operator]

Ladies and gentlemen, that concludes today's conference call. You may now disconnect your lines. Thank you for participating.