Lynas Rare Earths Ltd
ASX:LYC
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
5.53
8.09
|
| Price Target |
|
We'll email you a reminder when the closing price reaches AUD.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Lynas Rare Earths Ltd
You don't have any saved screeners yet
Good day, and thank you for standing by. Welcome to Lynas Rare Earths' Quarterly Results Investor Briefing. [Operator Instructions] I would now like to turn the call over to Lynas Rare Earths. Thank you. Please go ahead.
Good morning, and welcome to the Lynas Rare Investor Briefing for the quarter ending 30 June 2023. Today's briefing will be presented by Amanda Lacaze, CEO and Managing Director; and joining Amanda are Gaudenz Sturzenegger, CFO; Pol Le Roux, COO; Daniel Havas, VP, Strategy and Investor Relations; and Sarah Leonard, General Counsel and Company Secretary. I'll now hand over to Amanda. Please go ahead, Amanda.
Thanks, Jane. Good morning, everybody. So fourth quarter results, which, of course, means at the end of the year. Really pleased that even accommodating for our significant investment in growth that we have finished the year with just over $1 billion still sitting in cash, which means that our continued growth plans are very secure. Now just turning to the quarterly sales. Despite really a much lower market price, I think this is a really excellent result, driven by our record operational performance.
And as we look at that, we really can see the value of the line of incumbency in this market and the fact that we have facilities which are in place and which are operating really very efficiently. So just turning to production to start with 1,864 tonnes for the quarter is a record. It's our second record in a row. As we look at this financial year, which has just passed in the first 6 months, production was significantly lower as a result of external disruptions to our ability to operate, more specifically the average caused by the lack of water in Malaysia. The second 6 months of the year shows what we can do, when we're not troubled by some of those external factors. And it really was an excellent performance at the lab, but also well worth recognizing that at Mount well, we also broke records in terms of concentrate production with sufficient produce to feed the record production in Malaysia and also to accumulate inventory of concentrate ahead of the start-up of our Kalgoorlie facility. The record production outcomes means that we have been able to secure supply for our major customers, ahead of any of the transition challenges that we've covered previously, if and when we are required to move from a sole cracking and leaching facility in Malaysia, to operating our cracking and leaching facility in Kalgoorlie. As we look at market conditions and the market prices, we have made a choice that we will now hold additional inventory.
Once again, a safety stock on that, but also because today, with the price where it is, we feel that it's prudent that we hold that inventory for what we believe will be an inevitable uptick in the market, as economic conditions, particularly inside China improved. Major projects are operating on each of our sites. I think we always spend quite a lot of time thinking about Kalgoorlie of course, because it's a substantial new facility, but we do have major construction activity occurring on each side. At Kalgoorlie, we are very busy. I was there just over a week ago, and we still have a lot of people on site, finalizing all the large parts of the plant ahead of our first production. In Mount Weld, we've really broken the back of all of the major earthworks and had some really substantial process as part of sort of early pause of -- our early cement pause, and we're actually seeing that expansion starting to take shape on the footprint. So once again, I was out there just a week or so ago, and looking at the site is really very exciting.
I mean, we've been operating with a very small facility now for a decade, but this is really a significant step-up in terms of our processing capability as we move forward. In Kuantan, we often don't really reflect on the scope of work which is being done as part of the introduction of mixture of carbonate as a feedstock, in addition to the lanthanide concentrate that we feed to Kuantan at present. And that receivable facility, we had taken the opportunity to also include some operating enhancements to continue to improve efficiency of the Kuantan site as we move forward, because as we see with the current price scenario, we need to be able to be successful, even when the price is lower. And that included some enhancements around things like soda ash loading and unloading, as well as sulfate removal circuit, as well as a new initial solvent extraction circuit, which is going to allow us to continue to drive improvements in site operations. And then finally, everyone will have seen from today's report, that we have named the sites that we have purchased in Seadrift, Texas, -- it's just -- it's in Calhoun County, not far from Victoria. I visited the site some time back. It's previously part of the closeby Dow site, and as neighbors, they will be, we believe, excellent neighbors.
They've already shown themselves to be very welcoming and there are opportunities for us to enhance operation of that side as it's constructed, utilizing some shared capabilities with our neighbors. It would not be proper to not reflect on the fact that we're very disappointed that we've had 3 lost time injuries during the quarter, 1 each at Mount Wells, Kalgoorlie, and Kuantan, and we really are taking the opportunity to pursue very clearly, sort of initiatives on each site to remind our people that safety must always be prioritized over any of the other deadlines or production outcomes that we're driving to achieve. I'm sure that many would like me to make some comments about the licensing situation in Malaysia as well. Of course, during the quarter, we received the 6-month variation to our existing license, which sees us able to continue to import and process lanthanide concentrate, through to the end of this calendar year. You would have also seen that last week, we launched our application for judicial review of the 2 appeals that we had lodged with the MOSTI Minister and which were heard in April. We believe that these are very strong, and we're pleased that Malaysia offers excellent processes to get proper reviews of these types of decisions. And so we're commencing that process now. But alongside that, and I think much more importantly, we're spending a lot of time aligned with various departments within the government and various leaders within the government to really look at the opportunity to focus on industry development in Malaysia. The development of industries, which are based upon the rare earth materials is something that is well recognized as value adding for an economy in well, of course, China, but Japan, the U.S., Australia, the EU, and I think that Malaysia and many in Malaysia who may not have put their minds to this so much previously, really now understand what this opportunity is for Malaysia and the unique opportunity that having the Lynas processing plant represents.
So really focusing on opportunities to enhance the Malaysian economy development, as far as rare earths are concerned is as important for us as the fact that we have launched those judicial review proceedings last week. So with those as starting comments, I'm very open, of course, once again to questions. Just key points, the most important, I think, is really the operational performance, record production levels at both of our current operating sites, gives us great confidence as we look to the future in a market that we believe will continue to grow and will continue to grow, not just in terms of demand, but also in terms of value.
So happy to take questions. All my colleagues Gaudenz and Daniel and Sarah and Pol are also happy to take questions.
[Operator Instructions] The first question comes from the line of David Deckelbaum from Cowen.
I just wanted to follow up on some of your prepared comments about stocking inventory. It seems like there's a combination of factors that work here. One just being maybe the timeliness of a weak market that you anticipate getting better. But just -- 2, I'm just curious what your expectation would be, I guess, in the ensuing quarters? Any guidance you can give on how much sales would be impacted relative to where you were in this fourth quarter, as you start stocking inventory to sort of maintain volumes for key customers?
Yes, it's going to be -- it will be noticeable, but not really significant. I mean our key customers continue to have demand, which is amongst our really sort of key customers, it's at least 75% to 80% of what we produce. And we will continue to do that, but where we might in other circumstances actually, allow some inventory build within the various sort of supply pipelines, we feel that it's prudent at this stage to help those within our own facilities rather than have them sitting in the pipeline.
That makes sense. As my follow-up, I was hoping that you could talk a little bit about just the Kalgoorlie commissioning process and the timeline there. Recognizing of course, that you're at some final stages, I guess, in finishing construction there, and you did say that this was sort of part of one of the considerations or paths of timelines that you're looking at. So I guess, how are you thinking about that progression towards getting to where you want the facility to be, going into this next fiscal year?
So I think everybody knows that we always had very challenging timelines on Kalgoorlie, which were quite arbitrary, really, based upon some of those license conditions, which were set previously in Malaysia, and our focus has been on ensuring that we have the productive capability, even if we don't have every last bit like at new buildings and those sorts of things finalized. And we're in a good place, as far as that's concerned now. We only have one critical path element left on the project, and that's the waste gas treatment plan. And we're substantially -- I mean, like, I think 99% complete on structural and mechanical and we are in the piping and all electrical phases of that project. Now because that sits as a separate plant within the area, we are able to complete our commissioning on all other parts of the plant. But we do need that plant to finalize before we can start the heat up cycle on the kiln, and we expect that to be within weeks. But we -- certainly as we've said, we're continuing along this path, but as well as that, we need to make sure that we are not putting our people at risk by having too many people working in too small an area, which is basically our comment about sort of workfront availability.
Next from the line we have Dim Ariyasinghe from UBS.
Congrats on the strong operational results. Just a question, maybe following up on, David, in terms of the inventory. So am I right to assume then that we can expect inward trade continue to build while the NDPR or the Rare Earth Price Complex is depressed. And maybe if you could just help us with any other considerations like how much capacity you have available to build in maybe relative terms? And yes, anything on that?
Sure, sure. So as I said, we have contracted volumes within a number of our key customers, which we will need to continue to serve through this period of time. And with many of those, we have a price adjustment mechanism, which means that if the price does go up whilst we have -- even if we have material sitting in the pipeline, we will be able to adjust for that price. But then we always have had a proportion, which is sitting at around about 20% to maybe 25% of what we produce, which is available for sale, not into the spot market, but we have a number of -- we have more demand from -- all customers who are contracted but not at assured volumes, then we actually sort of supply on an ongoing basis. And we will -- as I said, as we've made a choice that with some of that, we will not supply at the lower prices, but we will hold that material until the price cuts to improve.
Yes. That makes sense. I guess then just a follow-up question, and then I'll maybe rejoin the line, but it sounds like -- I sincerely hope it is a question of when, not if, but maybe could you help us in terms of like when you think prices could pick up again? Like is it the H2 production quota, maybe help us interpreting the TLEs please?
Yes. Well, we all have -- inside Lynas, I don't think any of us have ever had consistent winning bets on what's going to happen with the price of rare earths. Having said that, yes, I think that there's much written about the softness inside the Chinese economy. And we do believe that, that will pick up and there will be additional stimulus into that economy. We also see that the softness actually is in -- it's different across different segments of the market. So we still see sort of the primary driver of sort of growth in electric and hybrid vehicles continues inside China, as well as outside, but some of the other applications, which can be a little more optional.
The rate at which they grow. So things like, yes, there's been a bit of slowing of use in the wind turbine segment and in things like industrial automation or in China sort of home applications like new air conditioners and those sorts of things. So really, I think that that's going to -- as some of those conditions pick up, particularly inside China, we'll see the market price start to pick up. And yes, I think also what happens with the second half production quota will also affect confidence levels in the inside China market. I just wish I could give you a crystal ball forecast, which was correct, but I can't. And I think that what our position on this has always been, is that the long-term settings of the market remain really very positive and that we need to be in a position where we can be successful, if the market price is low, and we can be very successful if the market price is high.
Next question comes from the line of Paul Young from Goldman Sachs.
I hope you are well. Amanda, great to see record production from LAMP and also Mount Weld. A question, first of all, on LAMP, producing a run rate of 7,500 tonnes per annum in the quarter. Have you tested -- I'm just curious about the -- what do you think the current capacity actually is? Have you tested all the bottlenecks in the refinery?
And I guess, from a long-term perspective, where do you think you'll take a rated capacity too on LAMP as well?
Yes. So look, I think that it's -- I'm happy for Pol to respond to this as well, and since he's got up -- he's in France and he's got up at 2:00 in the morning, I should probably give him a chance to talk to make it worthwhile getting up. But I've got to say that looking at what the team is able to achieve and that we did still have some downtime for various pieces of maintenance during the quarter. So it -- I think that we see that we've got a little bit more that we can achieve out of this. And how far we take production, the LAMP, of course, is going to be dependent upon further discussions with the Malaysian government, with respect to the license conditions to step up production by -- we've got an industrial plan for the site, which we have put on hold at this stage, as we await some of the decisions on the license. But certainly, we're able to step up production initially by 50% and then by 100% for relatively low cost at the LAMP, given that we have the facility to operate the whole of the plant.
But why don't I invite Pol to make some comments, because it's his team that's delivered this outstanding results. Pol, you there?
Amanda, your line didn't go. Please go ahead.
No, he is there. I know. We spoke to Pol.
Sorry, I'm still here. I thought Pol was going to speak. Amanda, he might have some technical difficulties on his side. Can I just move on to Mount Weld and the record production there. And I think your rated capacity is, on an all throughput basis is 240,000 tonnes per annum, that's under environmental license.
I think you generally produce, give or take 60,000 tonnes of concentrate per annum so 15,000 tonnes a quarter. Just to put it in perspective, what does record production mean for Mount Weld? Does it mean 20,000, 25,000 tonnes of concentrate in the quarter?
Look, actually Paul, I'll need to get Daniel to come back and actually confirm those numbers for you because I just want to be sure we're talking apples and not apples and oranges because we tend to talk about this from a contained tonnes basis -- REO contained basis rather than total throughput. So I'll just get him to come back and do that. Suffice to say that, the objective is to make sure that each of our supply stages is aligned. And your point, Paul, which is that -- can we get some even further incremental improvements in the lab, we are focused in the same way at Mount Weld, to continue to get incremental improvements there. And as we're doing the work on the expansion, we have prioritized the areas where we will be able to improve Mount Weld's operations. So the current bottleneck is the dewatering circuit, and that will be the first part of the expansion that comes on board.
So we won't be able to make the jump from the equivalent 600 tonnes to 1,000 tonnes of NDPR per quarter in one go, but we will get some steps up, as we actually release some of those bottlenecks.
Okay. That's great. Obviously, it gives you the flexibility Amanda, if Mount Weld is running well. But I'll chase Daniel on that data. Just last question on this round, is just on the back on Kalgoorlie and the commissioning there, you're commissioning the back end of the circuit on the mix rare earth carbonate, sorry, from -- or concentrate from LAMP.
That's good. But just on the front end of the circuit being the kiln, you mentioned about the commissioning the kiln in September with the waste gas circuit being completed. With respect to the kiln commissioning, is that -- going further that, yes, you're pushing through first high-grade -- direct high-grade ore or Mount Weld concentrate through the kiln in September? I'm just curious about your experiences running the kilns in Malaysia and commissioning there. What sort of typical sort of process or timeframe did it take to sort of commission the kilns there and ramp them up?
Yes. So Paul, it's an interesting comparison, but not all that useful. I mean it's useful. And in fact, we've brought the team down who've already done this. We've heard quite a lot of our Malaysian team either already on site or going to be there shortly.
But when we think about the heat up cycle for the kiln in Kalgoorlie, it's much shorter than the initial heat up cycle a decade ago in Kuantan. It is more like we see with the way that the plant has been designed, it is more akin to -- if we take our kilns down, say, for major maintenance or something like that, and they go completely cold in Malaysia, then the heat up cycle that we get after we bring them back up, is going to be more like the heat up cycle here.And we're estimating that at some -- less than a couple of weeks, where I think the initial heat up cycle in Malaysia took longer than that. But remember, there was 4 separate kilns, and we certainly had issues there with specification of materials on that front end, which have been addressed at Kalgoorlie.
We will move to the next question we have Regan Burrows from Bell Potter.
Congratulations on the good result there. Just perhaps leading on from Paul's question before, just so we get the timing right. So just in terms of the mix of rare earth carbonate production now sort of targeting September, in terms of sort of final production out at the end of the plant. I think last time we spoke, you said roughly 2 weeks to get it up to Malaysia and then another couple of weeks to flow through LAMP. So are we sort of thinking October, November production coming through?
We certainly think that it's going to be in the next -- within this half year. I think that the speed with which it comes out the other end, comes down to the speed of the ramp-up. And as I think I've said to everybody here previously, ramp-up trajectory is inherently unpredictable. We have a number of scenarios under some of them, we ramp up really quickly and efficiently. And under others, we find ourselves with the challenges to deal with along the way.
One or another, we expect we will be getting first production at the other end in the second quarter of this year.
Yes. Great. Okay. That's good. And sorry to sort of go back to this question, but just in terms of the sort of preferential -- in terms of stockpiling, are you sort of preferentially stockpiling more NDPR or is it other areas?
Is there anything, I guess, you can give us in terms of the breakdown of that stockpiling?
Sure. It's NDPR and ECG, which is the heaviest compound. So the lanthanum and cerium we will continue -- and despite significant oversupply in China, we're pleased that lanthanum and cerium demand for our materials, particularly our sort of higher-grade materials has remained very strong. But we always have plenty of lanthanum and cerium, and so the NDPR and the ECG that will hold.
Yes. And that's probably going to be roughly 10% a quarter if you sort of take -- going forward. Maybe a bit more?
Yes.
Yes. Okay. That's cool. And just finally, if I could squeeze one in, just on CapEx. Obviously, CapEx picked up a little bit this quarter.
Just in terms of your overall guidance of expenditure for Mount Weld and Kalgoorlie? I think Kalgoorlie is mainly done, and it's just now focusing on Mount Weld. Just thinking, I guess, how you're approaching the remaining cash balance after you've completed the expansion of Mount Weld and those adjustments to LAMP? You've got a fairly robust cash balance there. Just sort of thinking about the strategy from how to best deploy that?
Sure. But we still have quite a lot of construction ahead of us, as part of the growth plan. But yes, so this year's cash is pretty much in -- almost exactly in line with sort of the guidance that we provided last year on CapEx, and it was for about $1.2 billion over the financial year just finished in the financial year ahead of us. And we haven't varied that big -- there can sometimes be a bit of movement between different projects. And certainly, we won't know the final cost of Kalgoorlie, until we've doubled the variations.
I think everyone on this call understands that those are part of projects. But the other thing is -- so we'll sort of see that. So we get some pluses and minuses across -- sort of across it, but to see envelope that we've indicated, which is the $1.2 billion in capital over the 2-year period remains current. We'll update that, if we see that there's any significant change.
Our next question comes from the line of Reg Spencer from Canaccord.
I have had some connection issues, so these questions may have been asked already. But I was wondering whether you could provide some comments on what you expect the Kalgoorlie ramp-up profile to look like, relative to your concentrate production from Mount Weld? And again, apologies if this has already been asked?
So I'm not quite sure I understand the question. However, suffice to -- I think that the short answer is, we won't have any disruption to the ramp-up schedule at Kalgoorlie, based upon supply of [indiscernible]. So at Mount Weld, we have built a significant supply of [kiln]. We've done a first test that will now be moving that material in retainers. We've sent a container to Kalgoorlie and back and sort of tested its flowability and all of those sorts of things.
So Mount Weld have built the stock which is required to ensure that we have no disruption to the Kalgoorlie ramp-up from availability of raw material. The other thing which is sort of pretty exciting is that our silos are various of the raw materials required to start up, have now got product in them. So we've received and are storing the various different reagents of other chemicals used in the process. So that's another part of the commissioning, of course, but making sure that we've got that material on site. And as people would have seen, even with the fact that we've had to implement an LPG gas solution ahead of sort of resolving some pipeline gas issues. We've got the first fill of that occurred as well. So the site is sort of progressively very well prepared for this sort of final commissioning and startup.
But we remain cautious in making any statements about it, because any ramp-up is inherently unpredictable.
Okay. Great. I guess it was -- my question was really more about where your target capacity utilization is relative to your concentrate production from Mount Weld, noting that, that expansion there still got a little bit of time to go. But I take your point, Amanda, that maybe I'll follow up offline. My second question relates to rare earths market outlook. I think this is the first time you guys haven't made mention of strong apparent demand in your quarterly for some time.
While I note your earlier comments there about the longer-term outlook, is there anything you can help us with on the short-term outlook? We know that production quotas have increased earlier this year by a lot. We're expecting the Chinese to announce something more in August perhaps, in relation to potential further quota increases. You mentioned in your report of the demand for magnets. So is there anything that yourself or Pol can help us within the -- say, in the next 12-month outlook, to give us some comfort around where we might expect pricing to go?
So we tried to get Pol to speak before, and seem to have troubles connecting. I'll try to give him another chance. But essentially, Reg, we're seeing it's a bit -- demand is different by application. So electric and hybrid vehicle demand continues to be strong, but we're seeing a bit -- much softer with some delays on projects and things like -- in the wind segment and also in household applications, for example, things like new air conditioners and those sorts of things in China.But I don't know, Pol, are you back on -- are we able to hear you?
Yes, I'm online. I don't know if you can hear me.
We can now.
The 2 factors is basically the production quotas of China. We released probably this kind of [indiscernible]. And I would say, again, in terms of demand in China, if the real estate industry recovers in China than -- because this is the weakest segment, market segment, then the demand will be back on. So that are the 2 factors to look at. The general economic situation of China -- which drives real estate, and the production quotas.
Okay. I'll cheekily ask one last quick little question. Pol, would you expect then -- sorry, China to deliver another production quota increase, and where does that sit relative to what we might think capacity utilization to be in China?
I can't answer that.
And whilst we've got you, Pol, because the earlier question about -- Paul's question about how much more do we think we can get out of the LAMP, than sort of our current performance?
This is an interesting question. So provided we have clarity, of course, with the regulators in Malaysia. I think we have, of course, studied a lot on the industrial plan for them. And I would say that overall, land site structure is fit for twice more production than what we have today. So that -- of course, with investments, but debottlenecking kinds of investments, could double the production in Kuantan, if we wish to.
After that, we talk about the new site, there's different stories and different economics, but that's the potential.
Next on the line, we have the line for Al Harvey from JPMorgan.
And just wanting to get a little bit better understanding of that ramp-up and the sequencing between Kal coming online in Malaysia, taking the product. So I guess you got to switch things off, the cracking and leaching off in 2024. I know you're not providing guidance, just given difficulties ramping projects up, but you have talked about some scenarios there. So just trying to get a sense of the range of outcomes around the ramp-up? So is it likely that we see things ramp up at Kalgoorlie from September, that kind of gets you up to a 50% capacity that can then feed into Malaysia?
Or is it -- are you expecting it to be much faster or less fast? Just really trying to get a sense of what happens into calendar year 2024?
Well, yes, Al is difficult. I think that as we look at our various scenarios, we can see ourselves as the potential for -- at least still a couple of months where we would have lower production -- so let's say, a quarter of lower production, where previously, when we were looking at sort of the 30 June deadline, we were looking at a quarter of no production. So that would be the difference that, that additional time Malaysia has given us.
Great. And maybe if you could just expand a bit on next key milestones for the U.S. facility, are you going to get [Technical Difficulty] or anything on the -- just wanted to know what to look out for?
Sorry, you just broke up, are you going to get what?
Sorry. So for the Texas facility, just wanting to understand the next key milestones there. Will we get a study or what should we look out for there?
Yes. We will have a more detailed study. Our team is actually working on that at present, and we will be able to provide additional information. But as I've indicated previously, we are constructing this plant, in partnership with the U.S. government.
And so together, we make -- we certainly have to accommodate their view on what we disclosed and at what times. But we will have sort of a completed study which looks to all of the activities that need to be completed on that site in the relatively near future.
Great. And just finally, you mentioned in the downstream part of the release, low hydrochloric acid availability for cerium and lanthanum production. You did say that demand has been pretty resilient for that product. So I just wanted to get an understanding of if that low availability has been resolved and if that can kind of help you backfill some cash flows in the near term?
Yes. We're in a much better position as far as supply is concerned. In terms of its effect on sort of cash flow outcomes, it's relatively moderate. It's improving as we're bringing even more sort of higher spec materials to market, but it still remains that cerium and lanthanum the materials are in oversupply and so therefore, we know, sort of the pricing for those remains pretty low. So it helps, but it won't make the difference compared to the material that we've -- that we'll be choosing to hold this inventory on NDPR and ECG.
Follow-up questions from the line of Paul Young of Goldman Sachs.
I've got a follow-up question on the downstream or refining capacity. Just trying to square that away. Considering we had the CapEx guided on Kal and Mount Weld, we don't have the CapEx estimate for the expansion from 7,000-odd tonnes to 12,000 -- 12,500 tonnes of NDPR. Pol just mentioned that you've got installed for the and a good footprint in at LAMP. So it's a very low-cost brownfield expansion there.
I presume in the U.S., you've bedded down the site location, but still studying -- I presume the size of that refinery. So how do we think about what -- well, first of all, what the size of U.S. refinery is? Is it still 5,000 tonnes of total res? And where will you expand -- and what's the CapEx associated with the refinery piece?
Okay. So if we take the first in Kuantan, the capital that we spend in Kuantan is wholly dependent upon the resolution of discussions related to our license. And so as Pol indicated, we had developed a plan, and it is orders of magnitude lower cost than anything else that we could invest in. And certainly, within the $1.2 billion guidance that we've provided, we have some of that capacity up plan, about 50% of that capacity up plan is included within that number. So that gives you a sense really for how -- sort of how efficient any increase in capacity in the LAMP pit.
But the decisions on what we invest and how we invest in the LAMP will not be finalized, until we have some of the current licensed discussions that we're having complete. With respect to the U.S., we have got 2 components to that plan. One is the heavy rare earth separation facility and the other the light. And together, we expect that that's about 8,000 tonnes of separation capability. And we will, as said, be providing some final work on that. The team has been working very diligently with our local engineering partner on updating all of our forecast costs in those areas and also ensuring that we've got those costs fit for purpose with the site, which has now been applied.
That's great context and info. Just back on LAMP, as far as if you do decide to expand LAMP to whatever the number is, how long would it take to do the engineering studies? And if you -- how long will it actually take to complete that expansion? I.e., if you pull the trigger and say, let's just say, for example, you get an extension to Malaysia, hypothetically to run the cracking lesion beyond 1st of January, you do decide to commit to expanding LAMP. Would it be ready in time to take the expanded material from Mount Weld?
By say, middle of 2025 calendar year?
We would expect it to be -- it will proceed the completion of the Mount Weld upgrade.
We also have another follow-up question from Dim Ariyasinghe from UBS.
Just one more on costs. I know you haven't guided too much on this, but like how -- can you give us a relative guide on how the cost base increases, just assuming like so you've got the appetite in, you've got Kal online, like how that potentially changes the cost base, given where the NDPR price is. I think it's just [indiscernible] revisit what you've said about this?
Sure. What can I say, Australia is a more expensive place to do business than Malaysia. Oh, gosh, that's a significant insight for all the analysts on the call, isn't it. So there are elements for operations in Kalgoorlie, which clearly are challenging for us. But having said that, we also see opportunities for us to be able to improve efficiencies on a number of the cost elements in Kalgoorlie.
I think under a new scenario with our 3 sites that it will take us some time to really optimize the efficiency across the 3 sites. And then when we have the fourth come online at U.S., that will be another challenge. Land side logistics is probably the most significant sort of difference that we're talking about because a lot of the cost disadvantage at Kalgoorlie, we've engineered that by engineering sort of scale into the facility. And I think everyone would know that when you've got sort of extra scale, you do get sort of cost improvements. So yes, we do have some cost challenges. But certainly, as this result shows, we are able still to be successful, even when the price is not at those very attractive levels than it was a year ago.
We have another follow-up question from Regan Burrows from Bell Potter.
Yes, apologies for the follow-up questions, but now that we've got Pol on the line, just potentially following up from Reg's question on production quotas earlier. Just trying to get my head around, I guess, the internal production in China. I think, Pol, you've mentioned previously where they're operating in terms of the cost curve. Do you take a view on, I guess, are these sort of internal producers within China are -- some of them are coming under for pressure at these levels, and where is the cost curve currently?
While the cost curve -- the competitiveness of Chinese producers vary from one to another. So it will take too much time for me to comment on each of them. And again, I wouldn't make so much sense that I discussed my guess about the production quotas. And I haven't been to China for a while, but my team has. I think what is important to understand is, that Chinese are very confident on the demand increase.
They are all investing in additional capacities, and you have to give them this, they are not stupid people, and they love money, so they don't spend money for the pleasure of spending it. So that means that, yes, we are going through a weak demand period at the moment. But the long-term strategy is really quite enthusiastic on the Chinese side. I cannot comment on the cost of the Chinese producers.
Yes. I guess just trying to figure out how much lower prices can go, if they -- [indiscernible] their internal thinking, but I guess yes.
Well, it has been quite stable for a while around $60 [indiscernible].
That's the end of the Q&A session. I would like to hand the call back to Amanda for closing remarks.
Terrific. Thank you so much. Once again, thanks, everybody, for joining us today. Analysts, any follow-up questions, I know that Daniel is sitting eagerly by his phone waiting for any -- and he's very happy to take any further questions. And I look forward to speaking with you all again, as we release our annual results later this month or next month, since it's the last day of July, isn't it.
So okay. So thanks all. Talk to you soon. Bye.
That does conclude today's conference call. Thank you for your participation. You may now disconnect your lines.