Hello all, and a warm welcome to the MP Materials Third Quarter 2021 Earnings Call. My name is Lydia, and I'm your operator today. . It's my pleasure to now hand you over to our host, Martin Sheehan, Head of Investor Relations. Please go ahead when you're ready.

Thank you, operator, and good day, everyone. Welcome to MP Materials Third Quarter 2021 Earnings Call. With me today are Jim Litinsky, Chairman and Chief Executive Officer of MP Materials; Michael Rosenthal, Chief Operating Officer; and Ryan Corbett, Chief Financial Officer. Before we get to Jim's and Ryan's opening remarks, I'd like to remind you that during today's call, we will make certain forward-looking statements that do not constitute historical facts under the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions, and as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this communication. For more information about factors that may cause actual results to materially differ from forward-looking statements, please refer to the cautionary language in the earnings release and in our filings with the SEC, including the Risk Factors section in our recent SEC filings. During the call, management will also discuss certain non-GAAP financial measures, which we believe to be useful in evaluating MP Materials operating performance. These measures should not be considered in isolation or as a substitute for MP Materials financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our current report on Form 8-K filed today and can be found on our website, investors.materials.com. And please check our investor website regularly and follow us on Twitter, Instagram and LinkedIn, where we often provide news and information on the company. With that, I'll turn the call over to Jim. Jim?

Thanks, Martin, and thank you to everyone joining us on the call this afternoon. Let me run down what we will cover on the call today. First, I will recap the highlights of another outstanding quarter. Second, Ryan will provide color on our operational results and financial performance. Third, I will provide an update on our Stage 2 and Stage 3 progress. Finally, I will share my views on recent market trends and some other thoughts. After wrapping up the prepared remarks, we will open it up for Q&A. But let's start with the third quarter highlights on Slide 4. The MP team continues to perform above and beyond even our own high expectations, again, setting new records for production and sales volumes. Across the board, every department continues to improve processes and overall execution, which, when combined with select equipment upgrades, is driving higher utilization of our assets and higher production volumes. These factors have produced a meaningful increase in our total output for the quarter. I would also add that we produced more REO in just this quarter than our predecessor produced in its best year ever. Let me repeat that. MP Materials produced more REO in just this quarter than the predecessor entity did in their best year ever. This stat is just really incredible, and it is also particularly remarkable when we think about all the operational, logistical, and labor challenges going on related to COVID. I am so proud of our team. I would also like to give a special thanks to our logistics team. Despite significant shipping and trucking challenges throughout the economy, we shipped over 12,000 metric tons of REO in the quarter. This represents a 30% increase over Q2. The ingenuity and dedication of the MP team is just awesome. And we've…

Thank you, Jim, and welcome, everyone. I'll be beginning on Slide 6 and starting in the bottom left-hand corner. As Jim mentioned, production volumes hit record highs in the quarter as we produced just under 12,000 metric tons of contained rare earth oxides. This was an 18% increase over last year's production and a 16% increase off of Q2's production, a meaningful increase, particularly since you will recall that Q2 was the previous record for the company. As Jim also mentioned, every department is making improvements in their processes and procedures, which are adding up to improved production results. Our mining team is ensuring consistent ore availability in feed grade to the mill while supporting higher feed rates. Our maintenance staff is ensuring record uptimes by staying ahead of wear trends and implementing strategic equipment upgrades. In the face of an extremely challenging supply chain environment, our procurement and logistics teams are ensuring we have the necessary consumables and repair parts in a timely manner as well as supporting the outbound logistics needs of record production volumes. Our operations and engineering teams continue to improve our processes and their execution, leading to steady and sustainable increases in production. And our safety and training teams are ensuring improved employee safety and environmental compliance and employee productivity and that lessons are passed from crew to crew and shift to shift. These individual modest improvements are compounding into meaningful results. As we look at the improvements at a more macro level, we believe we are seeing steady and sustainable improvements on our flotation process with modestly improved recoveries as well as higher feed rates. Notably, our uptimes in the quarter were 98%, a new all-time quarterly high for the plant. This resulted in a 6.5% increase in hours of production versus last year…

Thanks, Ryan. Before I start on Slide 10, I wanted to point out that we added a section of cool photos towards the back of the deck, which shows some of the ongoing progress at Mountain Pass. So please take some time to have a look. As I mentioned in my opening, Stage 2 and related work continued to make nice progress. Although not specifically related to Stage 2, we had a very successful first firing of both of our combined heat and power or CHP turbines in the quarter and have now begun continuous performance testing. These turbines each generate north of 12 megawatts of power and recommissioning this facility is important for a couple of reasons. Stage 2 will require significantly more power than Stage 1. So having a dedicated power source fed by a pipeline lateral should further improve the reliability of our processes. Second, we believe the CHP could cut our energy cost significantly and will provide us excess steam for our processes, which we would otherwise have to consume energy to generate. Importantly, we expect the plant to come online on a full-time basis by early next year. Also in the quarter, we recommissioned our water treatment plant, and for the last 2 months have been producing on spec reverse osmosis or ROR. This is also critical for Stage 2. As you can imagine, to attain the purity levels needed to produce on spec NDPR and other separated rare earths, we need to use highly purified water. So this is another important milestone to achieve ahead of Stage 2 commissioning. We will also use this water in the CHP plant as well as to assist on a limited basis with our Stage 1 processes. Specifically related to Stage 2. We have finalized most of the…

. Our first question today comes from Carlos De Alba of Morgan Stanley.

Sorry, I was on mute. A very good quarter. So if I may, first question would be on fourth quarter output. Is there anything that you can comment, given the planned maintenance that you will have or you had already? How much of a reduction maybe we should expect in the quarter?

Thanks, Carlos. Ryan, why don't you take that one?

Sure. Happy to. Carlos, this is Ryan. We tend not to give specific quarterly guidance, but what I would say is Q2 was another quarter with a plant to turn around. And so that's probably closer to what we would be aiming for, for Q4.

All right. That makes sense, Ryan. Then the impact of the Stage 2 hiring ahead on your cost. Is this something that should continue to expand as you get ready to launch that project? Or do you think it's going to be more stable at current levels?

Yes. I'm happy to start and then Jim, if you have anything to add. What we've seen over the last couple of quarters, and you can see this in the presentation in our materials is it's been relatively steady. And I would expect that likely to be the case over the next quarter or two. But we've been pretty clear that 2022 is a transition year. And so as we get closer to first oxide, I would expect certainly hiring as well as several other costs to start to pick up ahead of revenue from oxide sales. So that is something to think about as you guys work on your quarterly models for 2022. I don't know, Jim, if you have anything else to add on that?

Yes. I mean I would just say, Carlos, you can see -- you probably understand this. Hopefully, you saw the pictures in the back of our deck. We're making some great progress on Stage 2, and you likely know what these projects are. But in case for those out there who don't, you can see we've come a long way. We still have a bit to go. So we're just going to stay focused on getting that done. We feel we continue to feel great about 2023, normalized NDPR target. Ryan, I don't know if you want to add anything on that from a modeling perspective, but that's pretty much it.

And I want to state my last question. At what time -- sorry, more or less, around -- when do you expect to be able to give us more precise timing for the call commissioning or hot commissioning of Stage 2?

Maybe I'll tee this one up for Ryan. But that's -- I want to just kind of be clear, as we've said, probably, I think every earnings call since we came public that we really expect next year to be a transition year. We're going to have some cost in front of first fire, so to speak, when we commission and so there'll be some advanced work. And obviously, it takes a little while to get things going. So we feel very good about our normalized 2023, reiterating that. But maybe for modeling purposes, Ryan, if you can try to be -- if you want to help a little bit on that front, but really give a look at a target on--

Yes. The reality, Carlos, is I think that where we are today, I think it's fair to assume that the second half is when we would have first oxide. We're not, at this point, being more specific than that. We will continue to update all of you as we move along with the project. But as Jim said, obviously, hopefully, the results this quarter speak to our ability to continue to improve our Stage 1 processes, which obviously gives us a significant amount of confidence in what we will be able to achieve through Stage 2, given the REO we're producing upstream in Stage 1. But certainly, as we get ready to bring the refining facility back online, over the course of next year, the focus is properly integrating those assets. And so in any given quarter, if we need to take an extra day of downtime to get Stage 2 -- initial stage 2 tie-ins done, certainly, we're going to make the right long-term decision for the business. But we'll continue to update you guys as we go along, but hopefully, that gives you a little bit of incremental color.

Our next question comes from David Deckelbaum of Cowen.

Appreciate all the color today. A nice share on the quarter. I did want to ask, just maybe getting back a little bit to last quarter. I think you guys had -- you've reiterated your view that 2023, you're confident in the NDPR separated run rate. You talked about commissioning in the second half of '22. I think you guys had alluded to some decision-making around either time or cost. What does that reality look like this quarter? And how are you feeling and sort of the gives and takes there between cost and timing right now?

Sure. So great question. I think we tried to be as specific as we can in the script, which is just there are -- there's -- I mean, you see these headlines every day about supply chains and everything. And you can see from the pictures, we -- we're really -- we've made a lot of progress, but you just don't know what's around the corner. So we want to just be thoughtful until the job is done. And so you see what we see out there. But as we said earlier, the project is going really well. Certainly, there are lots of inflationary impacts in the economy. We've sort of openly stated that. And so we're just managing through all of that. Last quarter, we gave the example of what we were able to do with DoD and PPAs and getting some items that were at risk of kind of getting the schedule off, kind of getting those in order. And we continue to work through things like that to execute. But I do want to reiterate, I mean, I think -- and I understand people are particularly sensitive to this, given sort of the predecessor and given challenges of greenfield sites coming online. I mean, let's not forget that at the end of the day, this is a very cash-generative business while we wait. I think it's fair to say, after this quarter, we're really executing very well. So we're generating a lot of cash. And as I said earlier, whatever sort of -- when we kind of add it all up in the end, whatever amounts we're talking about here really pale in comparison to the operating cash flow we already have as a business. And of course, it's just the in-place asset value that we have. If you were trying to create a site like this from scratch, there'd be -- there's clearly about $2 billion of invested capital. If you look back in our site, and you're talking about 5 years and multiples of that to do a fresh one. So everything that we're seeing, put multiples on that as far as replacement cost. But hopefully, that answers your question. I know you want to model these things, but we really feel really good about how the project is progressing, and we just want to make sure that we are just very thoughtful about each day until this is done.

I can appreciate that. And I know that it's probably difficult to provide a resolute answer to either time or cost right now, but -- and the presentation more helpful.

And I think we've been -- thanks, sure. And David, I think we've been resolute that we feel -- and we sort of said this from the get-go, right, that 2023 normalized, that whenever you're ramping up for commissioning and then commissioning that there's -- sometimes there's challenges you didn't expect. I'm not saying we're seeing anything like that, but we want to make sure that we're very clear that we view next year to be a transition year. So hopefully, everyone is kind of long prepared for that. We're openly telegraphing that and judge us on our ability to deliver 2023. But by the way, in the meantime, we continue to generate a lot of free cash flow while we wait. So I think it's sort of a unique positive in that sense.

Absolutely. Perhaps for my follow-up, I'm intrigued by the commentary around recycling because I think that this sort of underscores all of the sort of accretive opportunities that are out there as sort of a rare earth hub in the United States. When you think about undertaking these, I know with Stage 3, the downstream magnet production, this is going to be perhaps a small step, not necessarily a pilot, but it would be consuming the minority of your NDPR. As you think about some of these other opportunities, do you foresee sort of taking on a large splash, ala like a Stage 2 sort of project within the next 3 to 5 years? Or do you think that this is going to be more of a testing the waters, setting up pilots, small iterative process?

So great question. Thanks for asking, David. I think that's something that I'm not sure people fully appreciate yet about our capability on the recycling front from the standpoint of when you think about recycling a rare earth magnet, it really is we have solvent extraction, right? It's what we do at Mountain Pass. Obviously, what we're gearing up to do. It's what our in-place facilities have. And so we expect to be the global leader in rare earth magnet recycling. It's not a big business today. But I think if we look out a decade from now, it could be a huge business. And essentially, to lead in that business, it's almost a certainty that you need to have strong solvent extraction capability. And so it's really part of our core competency. I think it's totally possible that you'll see a large project to the extent that it would make economic sense where we felt like we had a very high amount of product to flow in where it would be attractive economically. What I would tell you, when it comes to recycling, if you think about it, we're still just at the precipice of figuring out. And when I say we, I mean society writ large, figuring out recycling of battery materials and all these other things as the EV supply chain builds up. And the practical reality is, although sales are just starting to kind of take off and go asymptotic, if you think about the life cycle of an EV, let's say, it's 10 years. Some will be 5, some will be 15, whatever the number is. We are many years away from having the high volumes where it really makes a lot of sense to be truly economic. And so I think that there's a…

Our next question comes from Sathish Kasinathan of Deutsche Bank.

My first question is on the Stage 2. Last quarter, you highlighted the potential to improve the scope of the project to include heavy rare earth separation? Any update you could provide on that front, including any details on incremental CapEx required?

So Steve, thanks for the question. So we said that -- we said also, but I can -- I think I can kind of expand on that and then maybe Michael can too. So we continue to do a lot of work on heavies, how we can do it economically, what it would look like for us to do it at Mountain Pass. We believe that it will be a commercially viable, attractive business. Obviously, we have no announcements for you on that today. But certainly, it's on mission to make sure that we can do that. So you can expect that it's top of mind again. And so it's another quarter of progress. I don't have anything specific I can give you. But maybe, Mike, if you want to give a little bit more background on some of the thought process behind heavies. Go ahead.

Sure. Thanks, Jim. Yes. So obviously, many magnets, including higher performance magnets have some percentage dysprosium and terbium. And therefore, to support our own magnetic capability, we would like to be able to have that ability. Our process development team continues to pilot work and optimization work to improve upon what we've done so far in heavy rare earth separation, including looking at alternative separation techniques and extractants. And we continue to move along in terms of preconstruction site work and other evaluations of site infrastructure, so continue to move along and evaluate the opportunity.

I appreciate the color. So my next question is on the production volumes. So you indicated some downtime, some lower production volumes for fourth quarter. But given the operational improvements you have seen in the past quarters in terms of higher feed rates, higher recoveries, how should we think about the sustainable run rate on an annualized basis?

Satish, I'm going to use this an opportunity to once again reiterate because I just think it's a really powerful thing. And I think that the entire team at MP should just be very proud. When we think about this quarter, the fact that we produced more REO this quarter than the predecessor did in their best year ever, ever is just -- it's an extraordinary achievement. And it shows -- it goes to just sort of the culture of execution that we have here. And so I'm just -- I'm really proud of the entire team on that front. So I just think it's worth reiterating that, that is just a remarkable stat. With that, I think Ryan touched on some of this stuff for next quarter, but I think you're talking about sort of more longer-term improvements. Yes. So maybe Michael or Ryan, I don't know if you guys want to chime in on this, go ahead.

Yes, I can start, and Mike, please feel free to fill in. But I think, Sathish, we feel very good about the sustainability of the improvements. And the reason we talk about REO per uptime hour is because that's the critical factor here. Our ability to have driven both increased feed rates while maintaining and improving mineral recovery, I think, has been an incredible feat by Michael and his team. The reason -- we obviously are not giving specific guidance. I think you can kind of see what the bounds of our potential outcomes can be given the results that we've put up over the last several quarters. And we talk about downtime because I think the only reason we would have a different result, I think, than this quarter is when we take downtime, both for plant turnarounds and for other reasons. I spoke a little bit about it in response to, I think it was Carlos' question. Just the focus for 2022 is doing the right thing long-term for the business in properly tying in Stage 2 assets over the course of the year, sort of regardless of when you think first oxide is coming. And so we don't want to be overly prescriptive on any specific volumes. But I think that it's safe to say that we feel very good about the sustainability of the improvements that we've made. We're just going to be focused on executing for the long-term and being sure we're doing the right thing for the business and bringing on stage 2 assets thoughtfully over 2022.

The next question comes from Tyler Langton of JPMorgan.

Could you just provide a little bit of color on sort of how much CapEx is left for Stage 2? And then sort of how much is kind of fixed and how much could be sort of exposed to cost inflation?

So great question. A good way of asking it in a more detailed way. We haven't given those numbers out. So obviously, if we were to do that, we would be backing into something specific that we want to make sure that we're not backing into yet. So I don't know what we can tell you on that front, but maybe, Ryan, if you want to take a crack at it as well on sort of what kind of -- answer his question.

So Matt, we had spoken about the Stage 2 project overall being about a $220 million project. And obviously, that's sort of the number from several quarters ago. We don't provide a specific breakout on CapEx spend to date on what goes where. I would say, of the approximately $80 million of growth CapEx that we've spent so far this year, a significant majority of it is Stage 2 related, but there are pretty significant sums of capital in there for the combined heat and power plant and water treatment plant recommissioning. So I would not assume that all of the capital that we've spent this year as Stage 2 related. I think the thing that becomes a bit difficult to triangulate into for everybody, obviously, as Michael talked about some of the preconstruction site investigations and things like that for heavy rare earths. There are a lot of things that sort of tie into the rest of the plant. So putting a pin in it is a bit difficult. I think the reality is we'll continue to update you as we go along on our progress on the capital spending for Stage 2, but that's about as far as we've disclosed to date.

And then maybe just for Stage 3, I mean, is that something where you consider taking on a partner? Or is it something where more of the focus is to sort of build and operate it yourself?

Well, so I won't steal the thunder from our announcement before year-end as far as what our first step is going to be. Historically, we said buy, build and/or JV, and that remains the case. Obviously, we said on the last call, I think someone asked this or maybe it was the call -- losing track of time here, if it was one before. But the fact that we're -- it must have been the last call, the fact that we're announcing before year-end means we're building something. And so there's at least that Easter egg, so to speak. But so we are building something. But I would also just step back and say, longer term, how we view this because I just think it's important to understand it all. We will produce -- we have our -- you have our target NDPR, but we view the magnetics opportunity as something that is actually larger than what our current underlying content production is. If you look at EV penetration, just that alone, not to mention all the other electrification stuff, this is a very large opportunity. It is -- and what's fascinating about it is it's something that in the west, it's very challenging to do, unless you're positioned like us where you feel like you have some certainty upstream in the supply chain, right? And I think whether it was -- just to give you an example because I saw it on CNBC this morning, the CFO of Ford was talking about moving upstream. Every OEM is talking about moving upstream. I think what people are realizing is that if you play out these numbers, right, pick, look at the market tap that is just in EVs, right? So add up Tesla, GM, Ford, Volkswagen, all of them, Lucid,…

I appreciate the color. That's helpful. And then just a final question. Are you hearing anything just in China, obviously, you've heard about sort of the impact of sort of power restrictions on lots of different industries. Are you hearing anything about, I guess, restrictions or the power restrictions impacting rare earth production over there?

Not that this has anything to do with, but you've obviously seen NDPR prices continue to go higher. And I think that's probably driven by just the enormous demand. I mean, I think the intensity of the reach outs that we have received from parties has increased even more so than last quarter. So I think that's a function of the increased realization of potential shortages of materials. So that's very attractive. As far as the outages, there's nothing that I'm particularly aware of. I think what you're asking is sort of similar to what's happening with aluminum, right, where there's shortages, and it's driving the price of aluminum here. But I actually do think it's a relevant analogy. So I don't think -- it's not something that's going to happen that we've noticed in the last couple of weeks or anything like that, but it's a really excellent analogy to think about how people in the supply chain are thinking about this issue. And they're thinking about it across all these things. And this is not, one, this is more -- we'll say, more than 1 party that understand the risk to having the vast majority of raw materials come from one place, right? And again, I think I mentioned this in the -- as a big development during the quarter, but I would not underestimate how important of an evolution it is that China is consolidating its big 6 into a big 2. And I think -- and I've said this on prior calls, and again, I just think it's been a really big point. If you think back a decade or 2 decades ago, there really wasn't much electrification. I think that the Chinese wanted to take over this industry. But when you think about the world today, look at the public markets, Neo, Chao pang, BYD, Li Auto. These are huge manufacturers. And so I think that there's probably an increased realization that where are their own manufacturers going to get enough supply, let alone, do we want to subsidize the West, right? It doesn't make sense to destroy our own environment to subsidize -- and again, I'm just making up names, Tesla, GM, Volkswagen, whomever, to compete against our major OEMs that are now going global. So I think you've actually really seen a sea shift in the strategic mindset from them. And again, this is just our reading of the tea leaves, but it's intuitive, right, which is they're now positioning their upstream to feed into their downstream. And so I think that the western manufacturers are realizing that we're not going to -- China is not going to destroy their environment to subsidize our supply chain anymore. We better go figure out our supply chain. And then, of course, our phone rings, which is nice.

Our next question comes from Matt Summerville of D.A. Davidson.

So just two quick questions. First, with the production number. I mean, I want to underscore that a little bit as well, being 20%, 25% higher in this quarter than any other quarter that at least I've looked at going back historically. I mean, that's a huge step function up. Why could we not just apply simple algebra to that and say, okay, if 10 a quarter became 12, then why doesn't 6,000-plus tons of NDPR, purified NDPR, why is that not 6,500, 6,600.

Michael, since you live at Mountain Pass, you want to take that one?

Thank you. This one sounds a little bit like last quarter. We continue to make improvements in our process. And I'm really proud of our team, and they're working very hard from operations, engineering, maintenance, et cetera. And I do believe we've made sustainable improvements. But with those improvements, we continue to do trials and try to improve that further, and sometimes they work and sometimes they work less well. So sometimes it's 2 steps forward, 1 step back. But we're constantly moving forward. And I think the biggest opportunity for improvement and leverage to the financial model is improvement in recovery. And so we continue to focus on that. But you're correct, if the contained REO goes up in our concentrate, yes, you can do the math and it would result in more NDPR becoming available for separation.

Got it. And then it's pretty easy to pick up a newspaper and see some pretty striking statistics on just how clogged the ports have been for Los Angeles and Long Beach, which I assume, given you're not that far from there, you probably rely on those pretty heavily. So maybe just talk a little bit about how you're managing. I mean, you say -- and it's very clear, everyone is managing it well. But how are you managing through that on a daily basis? And was there a discernible hit to your P&L, albeit we may not be able to see it just due to the inherent leverage in the model, but was there a quantifiable hit to the P&L from expedited freight, et cetera, this quarter?

It's Ryan. Yes, I'm happy to take it. It's a great question, and we've said it a couple of times, but I'll say it again, we are tremendously proud of the team and what they were able to accomplish, not only getting out record production. But obviously, as we've talked about, ad nauseam, the timing is not always perfect, and so they were able to get out the small amount of inventory that has sort of backed up into the system over the last couple of quarters. The reality of the port is that even with the incremental hours that the longshoremen are now working, the pinch point, as you would expect, as soon as you address one piece, moved somewhere else. So originally, over the course of the entire year, it's been a sprint to get shipping capacity, outbound shipping capacity. We are lucky in that we are an exporter. And so in being an exporter, the sea freight pricing has not remotely had the step function that the sea freight and imports have suffered. But what happened is now that we've been able to secure capacity on an outbound basis on sea freight, trucking has become the pinch point. And I'm sure you've heard this in many other conference calls. And so it's sort of a bit of a whack-a-mole. As soon as one piece is fixed, another crops up, but I think that we are addressing it the best that we can. You can actually see in our P&L, we disclose in our reconciliation of our production cost KPI, exactly what the shipping and freight costs are for the business. And so you'll notice on a profound basis, it has not moved meaningfully. And again that's I think from a lot of hard work from the team. But it has seen some inflation, which is not unexpected. But just given the sheer amount of improvements that the rest of the operational folks have been able to achieve, that's a bit drowned out in the overall numbers, but it's something that we'll continue to execute on and hopefully be able to continue to overcome over the next couple of quarters. But everyone can see the numbers on the amount of ships out there and it continues to go up. So it's a full-time job for a lot of folks here.

Our final question comes from George Gianarikas of Baird.

Quick question on GM and the recent announcement with GE. I mean, it fits into this narrative of the U.S. and Western auto OEMs trying to procure materials. But I'm curious if you had any more detailed thoughts on that particular announcement.

Let me see what I want to say on that. It was obviously a beautiful announcement, and we noticed, and we applaud it. And I think that that announcement is indicative of a lot of the conversations that you can imagine are happening writ large. And I think it highlights the importance of exactly what we're doing in our mission, and it was pretty cool.

Details will, I guess, follow later on that one. I'd like to -- for you, if you could expand on your thoughts on the Chinese restructuring. And exactly why you think it's as bullish as you think for NDPR? I mean, I think I understand the broad logic, but if you could just share any more details there, I'd appreciate it.

Yes. I mean I think that if you look back -- and again, this is just reading the tea leaves, so you always do your own work on this front. But from what we see, if you kind of look at the arc over the last decade or 2, right? There were hundreds of players, many illegal ones. There was essentially no regard for the environment, particularly in the south of China with clays and just in toxic water going places, wherever you can go on YouTube and see stuff in the north and the south, whatever. That was cleaned up over time with a consolidation into the 6 majors. And even throughout that process, there was a continued crackdown on some of the illegal mining that had occurred. And some of the -- when you hear of the quota system, that's really about getting the illegal mining into the legal production system. And then what I think you saw here is just a continuation of that theme. It's a very strategic process, which is, I think, in the beginning, there was sort of a free for all of production of materials and magnets to be the low-cost producer irrespective of profitability and externality impact, right, to take over an industry. But the longer-term objective was likely, I would think, is ultimately about GDP and jobs, right? That is political power in China is driven by GDP and jobs. And so I think that now that there has been a downstream movement, right, and look at the major companies that have moved and brought jobs there downstream in this space. Now that, that has occurred, Chinese industry has not just accepted that, they've moved downstream themselves, and they want to compete. And so they -- to their credit, right? This…

That's the end of the Q&A session. I'll hand the call back to Mr. James Litinsky for closing remarks.

Okay. Well, thank you, everyone. I obviously want to say again, thanks to the MP team, really outstanding quarter end execution, and we look forward to talking to you all soon. Have a great day. Night. Bye.

This concludes today's call. Thank you for joining. You may now disconnect your line.