Mineral Resources Limited (MIN) Earnings Call Transcript & Summary

Good morning, everyone. Thanks very much for joining us. It's MinRes' half year results for '23. I'm going to run you through the performance of the business over the last 6 months. Then I'm going to talk a little bit about -- or a lot about where the business is going over the next 2 to 4 years. We'll talk about some of the innovation that we've got in the business, some of the opportunities we've got sitting out there. Mark will join us shortly for a run-through on the financial results. And then when we get towards the end, we'll take in a few questions. So a few highlights, overview of the first 6 months of the year. We've delivered a fairly decent result. It's been quite a strong result. Revenue is up 74%. EBITDA, as you can see, is $939 million. And we're going to declare a dividend -- or we've declared a dividend of $1.20 a share. Traditionally we've always targeted 20%-plus on return on our invested capital. You will notice there it slid down a little over the last period. The reason for that is that we're building a couple of significant projects out there. We're developing Mt Marion. And we've started to build and committed a lot of capital on long-lead items on the Onslow Iron project, so we're really -- if you take the amount on our operating assets, we're closer to 25% ROIC. And I have said in the past I'm aiming to get between 25% and heading towards 30%. When these newer projects come online, they will deliver that, so we're in good shape. We've had more than 16 years above 20% and we're going to grow it closer to 30%. Mining Services. We doubled the business from '19 to '22 and we're on track to probably do that again over the next 2 to 2.5 years. And that's basically driven by JV activity and a lot of external projects that we're looking at negotiating and talking to, so about 2.5 years from now, we're going to double that business again. And as I said, look, there's a record number of inquiries we've got out there that -- not just in Western Australia but around the world. So we're looking at sort of expanding offshore. The iron ore business. We signed FID in -- with our partners on the Onslow project with Baowu, AMCI and POSCO, so there's significant achievement, 2.5 years in the making to get that. I actually first started working on trying to develop that region in 2013, so it's been a labor of love. Yilgarn and Central Pilbara, we've been focused out there on reducing costs and product improvement; and the iron ore team have done an awfully good job on that. Lithium business. As you would have read, we've signed finally. I mean it's been again a long time in the making, but we've signed a binding agreement where we're restructuring the Albemarle joint venture in Australia. That's been over a year in the making, but an awful lot of work has gone into not just coming to an agreement but also understanding how we're going to run that business going forward, so we've got a lot of clarity around where that's heading over the next 5 to 10 years. We've also -- we're in full production on both the trains up at Wodgina, so that's been great. We have got Mt Marion in the upgrade phase, running a little late on that. I will talk a bit later about that. And we've got Ganfeng working with MinRes on long-term tolling arrangements with all the orders coming out of Marion. The energy. We are very focused on developing that Perth Basin. We're doing definition and exploration drilling, or we're trying to. Drill rigs have been fairly difficult to get. We've got majority shareholding in Norwest Energy, and the acceptances continue to roll in. And we're developing renewable energy on all of our sites. And we're mainly focused on solar and wind power to try and eliminate these and make sure we're not connected to any coal-fired power. People and safety. Very, very focused, as always, on attracting and retaining the best people in the industry. And our safety results are in great shape. We're nearing 6,000 permanent employees and contractors on the payroll. The TRIFR is at an industry standard low. We've been there for quite some time. We work awfully hard to keep it there. We drive that primarily through all of the in-house training that we do on our people from inception when they start right through to developing and with better skills and better work practices; no long lost-time injuries, which is always pleasing in our industry. There's been some tragedy around the mining industry of late, and that always brings home how important it is that we get that absolutely right before we go and do anything. As the business grows, the MinRes culture is growing very strongly; as I said, over -- almost 6,000 in the workforce. Retention on our people is just getting better and better. We're focused on development of our people across the board. A few examples: We've currently got about [indiscernible]. We've got 34 graduates, 16 trainees; and we're doing 12 trade upgrades. 34% of those people are what we call just next gen, so that means that they've got a mom, dad, uncle, aunt working in the business, so they know the culture of the business. And our retention rate on next-gen people is quite outstanding. We've increased the participation of Torres Strait and aboriginal people by 68% this financial year, proud of what we're doing there, but we've brought new systems and people in the business over the last 12 to 18 months and it's working well. I mean we really have to get those numbers up and get way more integrated but working hard on that. We've got a centralized in-house training center now, and we're much faster and safer at getting our people onboarded and getting them on site. And we hope that we're going to improve those safety results through that. We've got a great program running on with our female staff. We call it the Inspire program, and we're helping them grow into leadership roles. We're starting to do the same with a lot of the younger-generation people. We've just completed the first program on that recently. And we've got a very good scholarship program running through Curtin University where we're bringing in graduates. We're paying them a substantial amount of money per annum to keep them focused on this study and we're giving them work inside the business as much as they can handle. We're intending to increase those participants over the next short period of time, up to 15 a year. We've been doing about 10, but we're going to grow that; and again, a great partnership with a great university. We are also -- or have been on a journey to redefine the -- not just the workplace but the environment that we put our people in, and it's all part of to grow the business. We need to get high-quality people and we need to keep to do that. We've got to do a lot more than just pay them well. We do pay well in the mining industry, but the younger generation that are coming along don't consider pay as the #1 attraction in their career. They're very much the lifestyle and the environment that they work in, culture. They've got strong opinions out there, and we've got to make sure that we take notice of them because they're the future of the business. And they're going to be running it one day, so we've got to be very focused on being able to shape it in that way. We've been in our new head office now for 8 months. It's a unique experience. It's very different to what the rest of the country is used to, or the mining industry. We've created an incredibly different work environment. Our retention is up. The productivity of our people is better than we expected. A few facilities we have in there: We've got [indiscernible]. We've got a health center that's now open, and it's operated by some very good doctors and nurses that we've got working with us full time. We've got a large gym. Over 700 members are using it now. In-house psychologists; full restaurant with shifts, so we feed 800 to 900 people a day. And they have the opportunity to take away -- have takeaway meals; and for nighttime, coffee shop staffed by some great baristas. So we've got all the facilities in house, where we can bring the people into the facility in the morning and they stay in the facility all day. We have a lot of our clients and customers that want to come around here and have a cup of coffee in the coffee shop and talk about business, so all of that is working well. We're taking that out onto site because we want to really up the retention rate that we have out at our site. So our first experience is going to be a resort-style accommodation we're going to build on the Onslow project. Primarily we're building rooms that -- at 3x the size of the standard [ domes ] that are out on the site now. We're going to have double capability in all the rooms, so queen-size bed, lounge, big-screen TV, kitchenette, separate en suite laundry, balcony with a barbecue, so it's something quite different. It's really going to be something that's more akin to an apartment. The other reason that we're looking at this and changing to this is we're looking to make sure that our people on site are safer and much more secure. We think that, if we create this community-type environment where there's a very large proportion of females that will be out there as boyfriend, girlfriend, husband, wife or whatever, we're going to have a very different environment. And we're going to build -- into each of these communities, we're going to have Olympic-size pools, wellness centers, large gym, coffee shop, restaurants, so trying to create something that's much more normalized. And then whenever we're near towns, we're going to start building homes so that we can encourage our staff to go up there with the families and live there full time. So 10 houses going into Onslow right now, it's a bit of a pilot program. And if we fill them up, we're going to continue to do that, so let's hope that works. Sustainability. We, as the whole mining industry, committed to getting to decarbonization 50% by 2035. And as we've said, we're aiming to do better than that at net 0 by 2050. We really are in the hands of the outside world on being able to develop a clean green energy for us. I mean, when that's developed, like everyone else, we'll be able to use that, but in the meantime, we're doing everything we can to reduce our carbon footprint, so we continue to reduce our use per tonne of product produced of diesel. We are looking at how we can transition completely away from diesel, so we've got gas as that transition fuel. We think that's going to play a major role. It's not the final solution. It's not the ideal solution, but it's way better than coal and diesel, so I think gas is going to be around for some time. We are also -- we have a strong focus on regional communities, so wherever we can, we are making sure that we integrate with any of the local communities. And we're very focused on the traditional owners that are out there. We've got extremely great relationships with them, and all of that is working well. A lot of effort has gone in around Onslow, the gas around Port Hedland Perth Basin, on making sure that we really are engaged with the community and that we're going to provide benefits to the community and we're not going to be obtrusive in any way. Performance over the first half. I'll run through that very quickly. You've had a good look at it this morning. Mining Services. We're slightly down on EBITDA and on tonnes. That's mainly because we've had a couple of contracts come to an end. We have recently had 3 new mining services contracted [ and added back ] into that business, so we're sort of about net square. We've got a very, very strong project of -- a pipeline of projects, as I said, coming up. And I'll go through those a bit later. So no concerns around where mining service is going. Iron ore. Again, we're down a little bit on the volume, but the price has been much better than the same period, so the price of iron ore has been in a really decent place for a while now. All of our sites are operational. They're going reasonably well, focused on optimization. The Yilgarn, we've lifted production down there slightly and to a sustainable level. We've really improved the product quality down there, so we're getting a bit better return per tonne. And the Central Pilbara, we've had a few issues out there with the Wonmunna site. We've got a transitional ore out there that's retaining the moisture, but we're fixing that over the next few months. And Onslow Iron: Construction down there has commenced. Long-lead items are out and on order. The big transshippers are in the shipyard. In fact, one of them is only about 3 months away from rolling off, so the only issue we've got up there again is the hangover from the pandemic, from COVID. Everyone is short of people. The government agencies are short of people, of getting approvals done now. I'm going to say it's slightly -- somewhere between 2x and 3x longer than it was 3 years ago, not to say the government isn't doing everything they possibly can to help the project get underway. They are but just short of people. And they've got a lot in front of them. So that project, [ we look like ] first ore going on ship in about somewhere around May or June of '24, so not overly happy with that, but we can't do a lot about it. Lithium performance has been fairly decent, 177,000 tonnes of spod shipped, so we're up on that. We are turning into a chemical producer, so in the half, 11,284 tonnes of hydroxide and 1,080 tonnes of carbonate, so grand total of 10,600 tonnes that were produced. And there's always a difference. We've got to be a little bit careful and point out there is a difference between tonnes that are mined, shipped, converted and sold. There's a -- quite a long lag on all that timing, so -- but pretty proud. We're the first Australians to get into downstream production, but as I said, the lead time for ore coming out of the pit; turning into spod; and finally getting to its destination somewhere in China, Europe or the Americas takes quite some time. So we're getting there with that. Mt Marion has been running pretty well, running at steady state. We're doubling the size of the plant down there and we're doing that while the plant is running, so challenging. The upgrade is probably running about 3 months behind. CapEx is fine. There's no change in the capital spend but just the degree of difficulty of getting people and trying to make sure we've -- we're producing while we're upgrading. We're also doing a couple of studies down there on dry stacking the tails and water recoveries, so trying to be a lot more responsible on how we operate the mines. Wodgina is going fine. 2 trains are running. Train 3 is actually running, but we're using that as an R&D plant. We've got some different ore types out there that we're dealing with and we've also got a lot of work around the pit to do on. We've got a bit of a mountain to move before Train 3 can really come into full production. We've commenced a study out there on building somewhere around a hydroxide plant or somewhere between spod and hydroxide. I've been very keen to be able to bring that production back into Australia. We've got a steady -- a second study running out there on building Train 4. And it may be a bigger-capacity train than the 3 we've got running, but that's going well. We've got the binding agreement finalized, as I said, with Albemarle. And we've got them in the tent on both those studies, so they're going pretty well. On the energy, haven't done a lot in the Perth Basin over the last 6 months, been incredibly challenging with the drill rigs. We've got one heading for there now. Carnarvon Basin, again not a lot done, highly prospective region. We've got about 500 km of seismic reprocessing that we've done. And we're having a look at where we're going to put our first drill holes down out there, so we expect to do 2 of those in 2024. And we're also starting to look very closely on geothermal and we've started exploration work in that region. We've got about -- to give you an idea of size: We're the largest landholder in the Canning Basin, in joint venture with Buru Energy. They have a 25% shareholding. We've got about 17,500 square kilometers. And again we're the largest landholder in the Perth Basin, which a lot says the most prospective land in -- or for gas in Australia. We've got about 5,300 square kilometers up there. So that's sort of a bit of a rundown on where we're at on the first half. Mark is going to run you through the financials. And then I'll come back and tell you where the business is sort of heading over the next 2 to 4 years. Thank you.

Thanks, Chris. And good morning, everyone. I'm Mark Wilson. It's a pleasure to be here with you this morning to walk you through the first half results for MinRes for FY '23. As Chris has mentioned, we've had a strong and a stable start to the year. I believe the performance in the first half demonstrates the robustness yet again of the business model that we employ. Our balance sheet remains healthy and we're in good shape to support the growth that we have in front of us. In terms of the underlying profit and loss, first half has seen us deliver a record first half revenue of $2.35 billion. Underlying EBITDA of $939 million is our second best first half result. Lithium has been our strongest contributor in the period, almost -- well, just over $0.75 billion at $756 million. Through the half, we've accelerated our amortization on our iron ore projects. That's driven the increase in depreciation and amortization that you see there. Our underlying net profit after tax, coming in for $387 million. And as Chris said, the Board has declared a fully franked dividend, interim dividend, of $1.20. The next page shows the movement in performance on the prior corresponding period. The big story here is lithium. Lithium in the prior period was $61 million contributor, up almost $700 million. You see there the real benefits of the move to the integrated production that Chris referenced. Costs in the first half, generally across the board, consistent with the rest of the industry. We're seeing that in labor. We're seeing that in plant. Pretty much every category is under pressure to some extent. We've also seen some increased costs at Marion as we've opened up some new mining areas. The external contracts have a rise-and-fall mechanism in them to protect them against costs escalation but typically have a lag, sometimes 6 months, often 12 months, so we haven't yet seen the benefits of that rise and fall protection kick in. Overall we're sitting -- we're maintaining our full costs -- sorry, our full year cost guidance. So in terms of the cash flow, story here is in the increase in working capital that's supporting the growth in the lithium business to an integrated producer, $380 million. I've got more detail on the next slide to walk you through on that. You'll also see increase in CapEx there. That's driven largely by the spend in Onslow as we build out the growth story for the next 30 to 50 years. In terms of the moving -- sorry, the movement in working capital, on the following slide, you can see receivables increased by over $400 million. The lithium receivables are to Ganfeng and Albemarle -- or from them, so just those 2 parties, again driven by this move to integrated production. Iron ore receivable increase is largely driven by the higher price achieved for the commodity. In terms of the timetable for our conversion and working capital, we've tried to set this out to help investors understand how we -- how and when we recognize revenue and cash for our lithium operations. You can see from this that the timing to receive all of the cash from our conversion of -- or production of spodumene can be up to 6 months -- 4 to 6 months, depending on the project. And the first half has seen an -- I guess, an increased impact from Wodgina as we've ramped up from nothing and built those inventory and receivable balances up. In terms of the capital expenditure, on the following slide, you can see it's pretty much running in line with where we were 12 months ago. The only real difference is the spend in the half on Onslow. As Chris said, early items, long-lead items really see that ramp up in the second half. In terms of the balance sheet. Balance sheet remains very healthy. We've got cash and undrawn facilities sitting at over $2 billion. Just to put a little bit of context to this: 3 years ago, the capital employed in the business was $1.9 billion. It's now almost $5 billion, shows the growth in the balance sheet over that period. As Chris said, we are absolutely committed to driving returns on invested capital well in excess of 20%. Nothing has changed in that respect. We expect to continue to do that into the future. This business has had a very successful history over 30 years of allocating capital efficiency, and that's not changing now. In terms of the net debt waterfall on the next slide, net debt sitting at $1.4 billion. 9 months ago, we had very strong support from the bond market, the debt market. We've brought net debt back below 1x EBITDA. It's sitting at 0.8x. And gross debt is now sitting below 2x at 1.7x, so happy with that positioning. Interest coverage remains very strong. There's more detail in the back of the deck on the credit metrics. Next slide. I just wanted to show the impact of the shift in the business, as Chris described, to this integrated lithium production. You can see in those 2 charts just how important that is for us and will be going forward. It's had a material impact on the diversification of the earnings. In terms of the CapEx guidance for FY '23. We've increased it by about $300 million from where we were in August. That's largely off the announcement yesterday around Albemarle and the restructure of the Australian arrangements. So we've added in about $0.5 billion there for that initial amount that was outlined in that announcement of USD 350 million. We've pulled back Onslow a couple of hundred million just because of the delays with approvals and something that Chris was referencing earlier. Overall guidance for the business remains unchanged for the full year. Over this period, we've gained more visibility, as a -- again as a result of the announcement yesterday, around the outlook for our lithium battery chemicals business, so for the first time, we've provided some guidance on production and sales for that part of the business, but pleasingly, as I said, for the full year, we're expecting to be where we thought we were going to be in August. Before I hand back to Chris, we're just going to play a short video for you. Thanks. [Presentation]

Okay, I hope you enjoyed that little movie. It often gives you a really realistic view of what we're actually doing on site. We're trying to do that more and more so that our shareholders can actually see the size and the quality of the operations that we're running, but look. Mark, thanks for the financials. Let me just run you through where we're sort of heading in the second half and then where we're going over the next 2 to 4 years. It's sort of fairly important. I don't know why, but for some reason, our second half is always better than the first. And this year is going to be no different. The second half will be substantially better than the first. Over the last 6 or so months, the business has been incredibly busy. We've been out there doing a whole lot of different things, but I mean, look. In essence, we've put some stuff together. We think we've set the business up with 20- to 50-year contracts and operations and deposits. And we're going down a pathway now where we have the foundations in place so that, 50 years from now, the business is still going to be around and it will still be growing. So just a few of these achievements just to give you a bit of a snapshot of what we've done. Of course, we've got the Onslow Iron business develop. It's nothing to take lightly. It's a 35 million tonne operation on day 1. It's got billions of tonnes in that region. So you've -- sort of you've got the regions in the Pilbara. You've got the top of the Pilbara where BHP and FMG operate, and Roy Hill. In the middle, it's sort of owned by Hamersley Iron Rio Tinto. Below that, this region has always been locked up. It's been difficult to get the right infrastructure in it but quite an achievement. I will talk a bit more about that later. We have restructured the lithium business both with Albemarle and Ganfeng. And we've got a fairly good lock on where that's heading now over the next 10 to 20 years and the plans around how we can grow that in a sensible way. We've moved from being a spod producer now out to being a battery chemicals business in our lithium. And we are a primary -- primarily producing hydroxide. And we'll be doing some carbonate, but the intention going forward is that we want to get the upstream value of being able to convert all our spod now into a chemical. And we're going to look at the most efficient and -- the opportunities that give us the best return going forward. We're sort of well advanced on doing that. We're -- very shortly in the next days or week or so, we're going to make an application to the Chinese government to buy a 50% share in 2 hydroxide plants. We're doubling production at Mt Marion. We're growing our Mining Services business rapidly. We're doing that through transshippers. We've got 5, at the moment, under construction. We are looking, incidentally, at being able to take these transshippers offshore to other areas where we've got a lot of interest. We've developed the big jumbo road trains. It had been quite an innovative move. We're moving closer now to [ the cost of rail ] on these big trucks. We're moving a 340-tonne payload with a single prime mover and doing it incredibly safely and looking very shortly to have those driverless. We're exploring a couple large offshore opportunities and we're basically down to negotiating terms on those. So many, many years ago, we were offshore Africa, did some operations over there, but we've always been pretty much WA-based. But we're going to change that. We've consolidated our JV with Hancock on building the cape carrier berth out in Port Hedland, doing all of the work around getting that developed. And we have developed substantial plans around where we're heading in the Perth Basin. That's important to us. It's going to become a significant pillar in our business moving forward and it's going to give us a lot of opportunity in downstream. So the foundations for going forward, the next chapter. We've moved from mining services contractor through to an upstream miner. And now we're looking to go into a downstream supplier, which is quite a significant change, but it's an evolution and giving the business much more stability, much more longer term in terms of our projects and our operations and much more predictable on the margins and the revenue that we can make. As I said, we're exploring options outside of WA and offshore for all the business pillars, except the gas. And we are -- in some areas we're under negotiation. Mining Services, very important to the business. It is the foundation of MinRes. It provides the design, development, the engineering, the construction of all of our plants with both our mining services and with our joint venture partners. They're incredibly innovative. They've got proprietary products out there, and we're taking some of those products to the international market. Iron ore. We're committed to iron ore. It's got strong fundamentals. It's we're focused on long-term, low-cost operations. And we are looking at diversifying our products and markets and reducing supply chain costs, and we're doing that in a range of different ways. Onslow Iron: It's an impressive project, but again it wouldn't have happened without the innovation of our products that are mainly on the haulage from mine site into the coast. The project wouldn't support heavy-haul rail and again the transshippers from the coast offshore to the cape carriers. And again, the project would not support digging a trench and building cape carrier-type berths. So a lot of good things happening in that. Lithium. As I said, we've restructured the whole of the Australian business. We're expanding as a fully integrated battery chemicals producer. And we are supplying -- looking at more supply chain value and we are starting discussions with OEMs. That's where we think we need to be. In the energy, a lot of work to do around that. It's going to be an enabler for us to reduce our carbon footprint. And a big part of the energy business is working on how we can develop wind, solar and cleaner greener fuels, so that's a lot of people in house dedicated to trying to make sure that we achieve or, in fact, we better the targets we've set out. I'll just give you a little bit of detail around each of the business pillars. So as I said, the heartbeat of MinRes is the Mining Services. They're the largest contractor in the world when it comes to crushing. And they're one of the very large, leading mining services contractors. And they're doing that on the back of being able to provide innovative services to customers; low-cost, consistent-on-production and a very, very safe contractor. In many cases, we run safer -- sorry. We run better safety results than our clients, but we have the ability to do that because we are a diversified business. And we can move them through our mining operations, into our mining services with a whole portfolio of training that we build around them. We're running about 2,500 people in the workforce in the mining services. That's probably going to grow by about another 500 during the course of this year. And in doing that, as I said, a lot of the proprietary equipment now, we're reducing the head count on it both on the trucks, on the big NextGen crushing plants. And eventually they will be run by remote control. We're one of the few organizations left in the world that can actually go out and design and build a plant on a fixed lump sum. We do all of that in house, and that gives us a huge amount of flexibility. And it's a significant cost advantage to all our partners and clients when we can do that. So although I'm saying that, we're not exactly where we'd like to be on Mt Marion, but I think others are in far worse shape. We've got great long-term 20-, 25-year relationships with a lot of our Tier 1 clients out there, so a huge amount of trust placed in us. And we've got -- with the innovation we have now, we've got the capability of moving stranded tonnes that others can't do. So we can dig and crush them. We can haul them at a fairly low cost. And we can even put them on our customers' ships in remote locations, so the economic benefits that we're delivering to our JV partners and our customers is a big part of the reason why we always have fairly good growth behind us. The crushing business. They intend to install new -- NextGen 3 crushing plants. So this is the latest innovation, again, going into Marion now. And not too far down the track, we'll be putting them into Onslow Iron. And we expect to put probably another 3 to 5 of those away over the next 2 years. We've got 42 of the big jumbo road trains out there operating, and that's a mixture of outside clients and on our own ore bodies. We will add about an extra 170 of those to the fleet over the next 18 months. 5 transshippers, as I said, are under construction. They'll be coming into Onslow. The first 1 of those is not that far away. So a lot of those contracts that we're entering into now, they're 20- to 40-year type contracts, so it gives us a lot of stability. And we can predict where we're going and make sure that we've got everything in terms of maintenance and planning and budgeting much easier, so -- and as I said, they're pursuing some offshore opportunities, so we'll let everyone know of when that happens. Iron ore business. As I said, we're committed to the iron ore, strong fundamentals on iron ore. The largest mining companies in the world use iron ore as their staple. They've been in it for decades. It produces a very positive outcome every year if you've got the right deposit and you can get it onboard a ship at the right cost. That's where we're heading with Onslow and other projects. So traditionally, though, the price of iron ore -- I mean, over the last couple of decades, it's incrementally grown. We've seen some incredibly high prices and some ridiculously low prices, but it feels like we're getting much more stable where we're sitting. The -- globally, the mines are -- they're getting further away from their infrastructure. Their costs are going up. The grades are slightly declining, so we think there's good support for iron ore at around about $120 a tonne. We think there's very strong support with that, but it's unpredictable, as we all know. No one knows exactly where it's going, so we're transitioning our iron ore business into a long-life, low-cost operations. The key projects that we got in front of us, we think, will take us to about 90 million tonne run rate at Onslow, which I spoke about. Yilgarn. We're improving the quality down there. And we're also looking at being able to do magnetite down in that region. We've got an awful lot on the ground and we're doing a lot of test work around that. The Pilbara Hub: We are working out there very closely with Hancock in a joint venture where we've got a cape carrier berth in the inner harbor of Port Hedland. And then the Central Pilbara: It's running at a steady state; smaller, high-cost operations not sustainable over the long term. And the Iron Valley deposit has always been challenging. It's had a number of lives, but we seem to be able to keep that going. It does need a fair amount of capital thrown at it not too far down the track, so that will be something we'll be looking at closely. Just a bit of an overview on Onslow and FID approval from all the partners in August. MinRes is going to fund the project, design it, construct it and then operate it. And the partner's share of that funding will come back to us when the mine is in operation, so most of their income will come to us until that's repaid. We're developing a great supply chain in that Ashburton region, down through to the Onslow port, where it's unlocking billions of tonnes of stranded iron ore. The Red Hill assets, alone, out there give us at least 30 years run rate at about 35 million tonne a year. And the FOB cost means that it's very profitable through all the cycles we've seen over the last 15 years, so a great project, only made possible through the innovation that come out of the CSI business with the NextGen crushers, low cost. And they'll have a 40 million tonne plant and they are doing 35 million tonne. The big jumbo road trains gets it down to the port at a very low cost. The low -- and the transshippers low draft so they can come in close to the shore. We pretty much finished the dredging out there and we're about to start at the transshipping berth, so all of that is going well. It's probably the first commodity project in Australia that's been designed, from day 1, to be totally dust free, so the iron ore won't see the light of day from when it goes in the big jumbos, 150 km out, until it's going into the cape carriers 22 miles offshore. So we've been very mindful to make sure that we keep Onslow and that whole region pristine. And we've engaged with all of the farmers out there, the communities out there to make sure we've got everything as it should. The private haul road that we're building, there'll be 0 interaction between our trucks and any other traffic whatsoever. And that haul road will be fenced both sides to make sure that we don't have any of the local community stock wandering on to the roads, which is really important to get that relationship. So early works commenced. We're finalizing approvals. First ore is expected around May, June of '24 now. CapEx is unchanged. We're fairly locked on the $3 billion that we'll spend, so no surprises coming from that. Energy market, gas and the energy business in MinRes. About 7 years ago, we identified the need to have some long-life gas in the business so that we could fix the costs of what we're doing. We think we can provide gas into the MinRes business for about $1 to $1.20 a gigajoule and then, above that, whatever the cost is of transporting it, so $2 a gigajoule would probably be what we can do. And we can do that for the next 20, 30 years out, so huge opportunities for us. It's as I said. We see it as a transitional fuel. It's not the final answer, but it will get our carbon down. And we've got a lot of work to do on that [ first phase ]. Over the next 3 to 5 years, we're going to be drilling a lot of both exploration and development holes, so quite a few highly prospective areas out there. We do expect to hit quite a bit more gas. We expect to bring the Red Gully plant back online over the next couple of years as well, so the ultimate aim for up there. I think it will be a help with WA because they're predicting that there's going to be a little bit of a gas shortage and -- a few years ahead. And I think we can help fill that [ hole ], but I think ultimately what we're looking for is those, again the 30-year-plus operations. So we'll be looking at the lithium chemicals business so we can provide energy for that; iron ore pelletization, again, to make our iron ore product cleaner and greener and better for the blast furnaces, particularly around magnetite; other products like ammonia and urea. We can be the lowest-cost producers in the world simply because we've got gas onshore about 400 km north of [ Perth ]. So it will be -- I mean it will be a major part of the business going forward and we're fairly focused on that. We've got an offer out in the market, at the moment, with a takeover for the Norwest Energy. We're at about 63% of that so far. And I would encourage the shareholders that are out there to have a long serious look. We'll probably be taking over the Board very shortly, but we encourage everyone to have a look. If we can get beyond 80%, that means that all of the Norwest Energy shareholders get rollover relief, so in other words, no tax to be paid. And they can be part of that same project going forward. They're not giving it away. They're actually adding the rest of the -- or the other 80% of the -- of that gas field to their portfolio plus where we're going in lithium, iron ore and mining services. So the past couple of times we've done this, the shareholders have got great benefits out of it, so look. I really encourage us to have a look and get onboard with that. I mean, when I first got involved with a company out there called Empire Oil, which was where we got most of our land from, the value of [ Northwest Energy ], their market cap, was about 13.5 million, a junior company, as was Empire, not a lot of money being spent on putting drill holes to the right depth and doing the right research. It did need some money and needed a balance sheet to make that happen, but for all those out there that are a little negative around MinRes: I have taken your market cap from 13.5 million to about 450 million, so not a bad start. If we join together, we can do much better. Lithium portfolio. It's a monster business we've got with lithium. We've got world scale on what we're doing, high quality. So our deposits, both operating. We're in a Tier 1 jurisdiction, probably the best jurisdiction in the world: Mt Marion, Tier 1 asset; 50-50 JV with Ganfeng; MinRes designed, built and operated. Upgrades, as I said, are underway down there. We first built it in 2016 and got it to 450,000 tonnes. We're taking it up to 900,000 now, and that should start commissioning in April; lots of exploration potential down there. There's about 80% of our landholding all around the mine that's simply been unexplored. We drilled sufficient out to create a mine and we haven't done too much drilling since, so we'll be thinking about doing that. We've got, had some drill rigs down there in recent times. We've got 3 good target areas down there. And we've got some very good early results for pegmatite and extensions, so we're going to get more serious on that and just see if we can have a look at bringing some other areas online and seeing if we can get a bit of balance on the strip ratio. Wodgina, one of the world's largest, if not the largest; 50-50 between Albemarle and MinRes, another great partner. The pit out there is open in all directions and at depth. I mean again it was 100% MinRes owned. And we drilled it substantially until we had as much ore as I needed for my lifetime, but look. There's certainly a lot more to be had out there. And I think we're going to probably do some drilling out there, not this year, probably next year; and just see how much deeper it goes and how better the grade gets. 2 trains up there in operation. The third one is actually operating, but we're using it for a lot of test work around transitional ore, some lepidolites that we got out there. We're doing test work on that. We've got another fleet of mining equipment that's going into Wodgina. And we've got a mountain of rock to move so that we can get at the ore body and make it sufficient so that we can feed that third train. So that will happen towards the back end of this year. And of course, we've got a couple of studies underway out there. We're looking at what we can build out there for downstream processing and we've got another one running on [indiscernible] getting near completion. Spod conversion in the business. So we've got a life-of-mine conversion agreement with Albemarle. And that's for the 4 trains coming out of Wodgina. Separately to that, as I said earlier, we're making application to the Chinese government to see if we can buy a 50% share on those 2 plants. So they've got a 50,000 tonne plant, Meishan plant they call it, under construction. It's probably half built. They've gone very well on the construction on that and they're pretty much on time and on budget. And they've got -- we've got a second application in to buy another plant they've got in Qinzhou, and it's an operating plant. They bought that last year. It's operating and they're putting Greenbushes dirt through that. And we hope, hopefully, we'll get the approval of the Chinese government. We need to do that because we need to be quite early to market with our hydroxide. That's the best way of getting there, but as I said earlier, we're very keen to do development in Australia. And I think that it's doable. Kemerton, two 25,000-tonne trains down there. Train 1 is in operation. It's almost qualified that -- we're hoping that we're going to get some good product coming out of there in the next month or 2. And Train 2 is in commissioning phase, so Kemerton going fairly well. I mean Albemarle have made a few comments in their release last week, where they've had some issues down there with labor and the like but were slowly overcoming that. The MARBL agreement. MARBL, of course, is that what we call the Albemarle joint venture. We've named that MARBL. It owns the Australian assets. We signed off on that binding agreement on Wednesday. Had been quite a long time in the making, but around doing those documents, I think [ 57 ] in total, around doing that, we're also figuring out how we're going to run the business and develop it over the next 10 to 20 years. And we've pretty much got a good handle on that. Most of that agreement is backdated to 1st of April '22. And it's also subject to regulatory approvals in Australia, so we need FIRB and mines department approvals to get that totally binding. Once that happens, we will pass them over a check. And I think we've published all of the money that goes back and forward. And then we'll be fully engaged with them. And that will be our share of making sure we're locking in the hydroxide production. Kemerton. We've reduced our shareholding down at Kemerton from 40% down to 15%. And I think the reason we've done that, this deal, this way is that I think we're now really well aligned the not a lot of margin for MinRes coming out of Kemerton because we have to buy the product out of Greenbushes but a great story for Albemarle and the opposite for us up at Wodgina, so a much more balanced deal. And we're running Wodgina. That's our core business, being able to mine and process and operate. And Albemarle will take care of the chemical side, again their core business, so that's going well. We've also taken back the marketing. It's going to be a first for MinRes, marketing this style of product, but we've had many firsts in our career over the last 30 years, so not something that's going to be difficult for us to figure out. We're converting all of our spod to hydroxide. With a bit of it will be carbonate. And we have no product that's locked in to any contract, so we've got no legacy contracts. And we've got no forward contracts whatsoever, so quite a unique position to be in. We're going to be having discussions with a whole range of buyers out there, OEMs mainly. And we'll -- yes. Look. I'm sure you've got a few questions around how we're going to deal with that. Total CapEx for offshore for us is about USD 650 million, so not a lot of money in the overall scheme of things for the conversion that we're going to get. This slide here shows you a little bit of an overview of the unique market position that we're sitting in. We've got world-leading partnerships with 2 JV partners in Ganfeng and Albemarle, both very strong and just simply have been great partners to have. We're now developing that marketing strategy. Our focus, as I said, is going to be on the OEMs. We've got exposure to 3 of the world's best lithium mines. They're all operational and they're proven. They're all WA-based. So WA -- probably I've said this often. It's probably recognized the most ethical mining region in the world. I mean we are right at the top of the charts in terms of how we look after our people, how we make sure that they're safe, how we care about the environment and the relationships we have with communities, so I mean we're in a very good position. We're going to be very focused on being able to maximize our chemical conversion going forward. That's the way that the business will grow. And we're going to get some fairly decent long-term JV partners locked in with us on buying, so next 3 months, we're going to be busy talking to people around the globe on how to deal with it. The demand for the product, incredibly high. We struggle to see how -- as do the other producers and our partners, how supply is going to keep up with demand. I mean it's been struggling for some time. I think that they're still trying to figure out how many electric cars they're going to make year-on-year. Not all of the car manufacturers have come out with that, but with -- a couple that we have been talking to are well advanced on where they're heading. And they know how much product they need. And they know that it's going to be incredibly difficult for everyone to get the quantity they need, so I think most of the serious demand out there -- and I'm not talking about some of the analysts coming out with comments. I'm talking about the institutions that understand how many tonnes are needed to make the batteries for the cars. There's just not enough on the planet. And I think everyone underestimates too the time it takes to get one of these operations running. I mean, for us to get Wodgina 2 trains running and then get the third one, it's sort of an 18-month project. And the lead times are getting longer. To turn the fourth train on is probably -- from when we hit the button, it's probably a couple of years to make that happen. And you've got the long lead time on hydroxide, so there's a lot of time and work in getting the approvals now on -- just on these operating mines, so if you go into new regions to open up the new mines, it's going to be incredibly difficult but not impossible. So I mean we're yet to get a clear picture on the demand. We think that probably -- what I'm understanding is that most countries are going to be looking at having no new combustion engines on the road after 2035, so you sort of get a bit of a picture on, by 2030, how many of the new cars coming into production need to be electric. Stationary battery power storage is becoming much more important and it's becoming quite a big story. And there's quite a lot of demand around for that, so -- and I think a lot of the OEMs and the battery manufacturers are really starting to think about putting capital back into mines. So they're talking about it more. We're seeing them joining up with the miners. And I think, for them to spend the billions they have to, to commit to a factory, to build cars, they need to have a guaranteed supply, so we'll be directly engaged with the OEMs. Transition into the integrated lithium chemicals producer. We're on track, I think, within about 4 years to produce about 120,000 tonnes of hydroxide. The first half of this year, we've done 11,000 tonne. We look like doing 19,000, so that takes it up to 30,000 tonne this financial year. And we'll keep growing that year-on-year as we move forward, obviously. We want to build downstream capacity in the Pilbara, as I've said. We're working hard on that. And we're going to continue to look for other deposits internationally and in Australia. I mean we are looking at a number of different regions where we've got pegmatites and we're going to grow our reserves and resources. We are having good discussions with state and federal government, and they are very supportive of us building in Australia. We're just seeing if we can get them to come up to close to some of the tax breaks and the financial investments that other countries are willing to make. We need a -- if we can get our government to come across with some more benefits to help us to convince our JV partners to get involved, we will have a much better shot at getting plants built here. Look. I'm going to close now. I think it's sort of enough. I think I have gone on for long enough, but we've delivered a good first results. The second one is going to be better. There's a lot of effort underway to set us up over the next 20 to 50 years. We're building some of that now. We're getting approvals for some of it, but we've got all the foundations that we need. And we're going to expand into a fully integrated battery chemicals company, and we've locked in substantial growth in our -- all of our businesses. And we've got a good plan on where we're heading over the next sort of 2 to 5 years. So we've got great Tier 1 assets. We're in the best Tier 1 mining jurisdiction in the world. We've got great partners. And we've got and getting really high-quality people onboard in the business, so our track record has been strong, so far. And as we get a better balance sheet and the company grows, we get better and better. So I'll wind up with that. And if anyone out there has got any questions for Mark or I, we would welcome them.

[Operator Instructions] Your first phone question today comes from Paul Young with Goldman Sachs.

First point is on the Albemarle JV. Well done to getting it done. You got there in the end. And it actually appears very value accretive in the spreadsheets, so well done. First question, Chris, is on the timing of the switch from the current more expensive toll trading arrangement and feeding the Wodgina concentrate into the Albemarle facilities, just 2 points on that. With Qinzhou, does Wodgina concentrate [ feed in as ] Kemerton ramps up? And then on the commissioning of Meishan, what is the -- what is actually the timing of the commissioning and ramp-up of Meishan?

Yes. Look. Meishan -- Paul, yes, thanks for that. Meishan is around mid '24, and they're expecting that to ramp up quite well. I mean it's pretty much a copy over -- of what they've got over there and they've got a stable workforce over there. Qinzhou, the one that we actually called [ satin ] because it's much easier to pronounce -- so that one is operating now. It's taking Greenbushes dirt. It needs work done to take Wodgina dirt, so we're going over to flotation-style dirt. So it's about a year on getting the long-lead items and getting all that done, so they'll continue to run that until they convert that over to Wodgina. And in the meantime, all Wodgina dirt, they're putting arrangements. And they have a lot of arrangements in place over there for toll traders, so most of the Wodgina dirt is going to go out to third parties until we get those sort of 2 plants running, but they have the capacity to do that. And we've got an arrangement with them where that's our skill and expertise. We just send the dirt and they'll convert it. We do get -- in the [ satin ] plant, once we write the check for the conversion, for them doing conversions, we do then share in the benefits of that [ satin ] plant. So that should -- and that will happen immediately after getting approvals here from the Australian government and the mines department for this transaction, the Australian transaction, to happen, which I don't know how long that will be, but it should be fairly straightforward.

Your next phone question comes from Hayden Bairstow with Macquarie.

Chris and Mark, yes, just echoing the [ Young's ] comments, I think, [ for altogether getting that ] Albemarle deal done finally. I'm just interested to understand a couple of things. Firstly, growing the lithium business from here, is it likely that, that JV and the Ganfeng JV will be how you'll try and structure the business? Or do you see yourselves going out and trying to find other assets to continue to grow this business more medium term? And then the second one is just on Wodgina and potentially building downstream in Australia. I mean obviously this deal you've just done with Albemarle, obviously, the capacity cost is half of what it's cost other players in Australia to build capacity here. I mean, is that something that you look to take to the government and try and get some financial aid given the increased costs to get downstream capacity or more downstream capacity built here?

Yes, yes. Look -- apologies for the technical side. Look. The first part of your question, Hayden, yes, we are. Look. We're looking to expand beyond the joint ventures, in our own right, both in Australia and internationally. And we're also looking -- obviously we're expanding Mt Marion. That was a fairly easy arrangement to come to with Ganfeng. And we will be growing Wodgina. And the way we will grow Wodgina, it will be, first of all, we want to make sure we've got conversion capacity in front of us. So that's a combination of what we are applying to buy in China; downstream processing in China; and hopefully, being able to build in Australia. And we do need government help. Otherwise, we're simply not going to get our joint venture partners in Australia, but it is incredibly positive to Australia if we can get those plants down here. I mean we're keen to do it ourselves, but we can't get it done on our own. And the opportunities that are being offered by the U.K. and Europe and U.S. is very significant. But again it's more than worth [ them doing here ].

Your next question comes from Kaan Peker with Royal Bank of Canada.

Chris, Mark and team, following on the same line of questioning just on finalizing that JV agreement. With regards to downstream processing, of the 100,000 tonnes of capacity, I think 75,000 was outlined. And where is the other 25,000 capacity coming from?

That will be basically extra capacity that Albemarle will probably build. They've -- we've simply got an arrangement with them where they're going to provide that 100,000 tonnes as it's required. So I'm not quite privy to all of their plans and -- firstly. And secondly, we have to have the approval of the Chinese government before we can go and give out information that's confidential.

Sure, understood, but is there a certain region that's being considered? Or that's not really being provided yet.

I'm not -- Albemarle have plans locked away on what they're going to do. We -- and then -- and outside of that, we are considering other regions as well. And we're going to do some study work on that, but they have a fairly clear understanding of how they're going to convert that.

Sure. And the second one is more around the opportunity of lowering grade, well, of spodumene concentrate at Wodgina. I think there's a slide in the presentation that mentions it. So just sort of 10% to 12% uplift in recoveries, is this something MIN plans to go ahead with? And does it need sign-off from Albemarle?

Yes. Look. We have an agreement with Albemarle on that and we've actually started that now. So as of, I think, early January, we went into the 5.5% range. And that obviously just gives us better recoveries overall.

Your next question comes from Lachlan Shaw with UBS.

Chris and Mark, well done again on the finalization of the JV. Just a couple from me. So just on Onslow, the pushback to mid '24, can you just sort of run through that again? I might have missed it earlier in the call, but what's driving that pushback in timing, please?

Purely around approvals. Approvals have been much, much slower than we anticipated. And the reason for that is that, look, over the last 2 years or so and almost as a direct result of COVID, the department has been -- or the departments, the agents, government agencies have been shorthanded on people. That's half created by the mining companies. The mining companies have been stealing the government people, so they've been running shorthanded. And it's simply taking 2x to 2.5x longer to get approvals done, whether that be through mines, environment or anywhere, than it was going back in 2020. So all our studies had the right times in them. We just didn't -- we didn't understand that -- the time lag that it was going to take. So look. They're all in hand. I mean we've been getting a lot of support from government and from the ministers, the departments. Everyone wants the project to go ahead. It's just taking much longer than we anticipated. We expected to be well into the haul road now. We're not. We're just waiting on that final approval on that to come through, so that's sitting out for public comment at the moment. And by about, look, end of March, we should be on the move. We have been given the go ahead on certain areas, so we've got early works going on out there in a range of areas at the moment. So we're hoping we can pull that back from that, but we want to give you the most likely news.

Okay, great. And then just second question. So given that, would that have any impact on potential timing of studies on the fourth train at Wodgina? And I guess, how should we think about timing there, in any case, given that you've just finalized the JV restructure? The agreement to go to 5.5% is done. How should we think about that timing and the studies in that fourth train at Wodgina?

Yes. Look. I think we're only probably a couple of months away from the -- finalizing the fourth train study. And I mean I think the decision on that will be fairly quick, but the answer is yes, that if I was building that in 2019 or 2020, I would think it would be a 12- to 15-month build. Today, it's more like a 2-year build, so it's probably at least 2 years away and that we've got other issues surrounding that as well because we've got to make sure now that we've got all the changes that are going on with the traditional landowners, but I mean our relationship out there is very strong. But we've got to make sure that we've got all of those new agreements in place, so again a lot of work to do around that.

Your next question comes from Glyn Lawcock with Barrenjoey.

Chris, look. You've, I guess, essentially enabled Albemarle to get their capital out of China and relocate it back into Australia. And you've done the reverse. How comfortable are you with that putting all this capital into China? I think -- since the JV discussion started, I think the [ landscape has ] probably changed a little bit, so just interested in your thoughts on how you're thinking about that. Because we saw what happened with Russia and assets. They became worthless, so I'm just wondering how you think about China.

Yes. I mean -- and that's a really good question. I mean our relationship with our Chinese partners and -- has always been incredibly strong, but the issues surrounding the -- how would you say it? The issues surrounding the cultural difference between 2 countries is quite strong. We are concerned. We've had long discussions with Albemarle around that issue and we -- look. The returns that we get out of these plants in China is seriously significant. The payback is incredibly quick, so we think -- for a number of years, 3 or 4 years out, I think we're relatively safe. We've looked at it on a short-term investment basis, and it's more than worth doing that rather than taking the time to go build somewhere else. I mean it's one of the issues that's kind of sort of slowed MinRes down. I mean I think you're -- if you're an American company, I think it's the risk is somewhat less, but it is easy for Australian products. As we've seen with coal and wine and wheat and barley and the likes, it's fairly easy to turn Australia off, so it's a concern, but it's a calculated risk. And I think that the payback is going to be significant.

The other point...

Yes. No, I get it.

Glyn, it's Mark. The other point I would add is obviously we're talking about pretty strategic minerals going into China. And there's big demand for it inside China, so we think it's a -- sort of a symbiotic relationship. There's no real alternative for them.

Yes, I get that. I just -- I look at what the [ market did to the value ] of Russian assets as well when things go [ pear shaped ]. Just a second question, if I could, just to clarify: You talked about, I think, to answering Lachlan's question, you hopefully have, by end of March, the permit for the Onslow road. Is that a critical date, like, to make June -- well, middle of '24? Or what is the critical date for the road so you don't slip again on Onslow?

I think we really need to have that -- look. End of June would be probably a date that would push the following -- push the project out. We've got a lot of support in getting those approvals through and it's gone pretty well, so far. I'm being fairly optimistic on the fact that it's probably going to be trouble free, but look. It is possible. It could be as long as end of June before we get it. And the guys in the planning have counted the end of June as being the date, so all going well and we got it sooner, we would have some good news on first ore on ship.

Your next question comes from Alex Ren with Crédit Suisse.

Chris, Mark and team, yes, really good to finally see that deal coming through with Albemarle. Just a couple from me, please. And just looking at the CapEx guidance, could you give us a bit more color or clarification on the lithium growth CapEx jump? Is that mainly just because of incorporating the downstream JV deposit? Or some -- is there other reasons like inflation, [ scaling it up ] for Wodgina Train 3 and 4? I will come back on the second one.

It's incorporating -- Alex, it's Mark. It's incorporating the Wodgina -- or the Australian JV restructure and the expectation that we're going to be paying USD 350 million sometime this half.

I mean the CapEx has jumped. I think rough calculation is like $500 million versus the previous guidance, right?

That's Aussie, yes.

[ What's the other part ]?

USD 350 million is the commitment.

Yes, yes, understood. Aussie, right, yes.

Yes.

Got it. And next question is just on the downstream hydroxide [ parts ] with Albemarle. That changed all of our [ starting plan ]. We will start processing our spodumene from early '24. Presumably, during the interim, [ they'll end up mostly ] processing their own products, with some volume reserved for tolling [ your share ]. I guess what I'm trying to ask here is that does Albemarle have enough tolling capacity allocated to MIN, considering the upstream just rapidly ramping up, [ right ]? Understandably, your part of the deal is to ship the rock to them. Just wondering if there are any -- if there's any discussion internally about a potential contingency if they can't accommodate your spodumene volume.

Yes. Look. They've -- give us a fairly detailed plan on -- for all of this calendar year. And look. They appear to have all of the capacity locked away that's required. They've been working on this for quite some time, so yes, it -- we're fairly confident with that.

Your next question comes from Matthew Frydman with MST Financial.

Sure. Chris and Mark, I have 2 questions. Firstly, I suppose, on funding and capital, you've already got a pretty sizable project pipeline, which obviously you've now added the capital for additional conversion capacity. You've probably accelerated your plans in the Perth Basin [ for taking up ] Norwest. You're talking about potential offshore mining services projects, among many, many other things, but at the end of the half, gearing obviously quite high relative to history at [ 29% ], 0.8x net debt-to-EBITDA, so wondering. Firstly, what are your upper limits around the balance sheet? Where are you willing to take the balance sheet to fund this growth? And how does that shape your options for fundings going forward?

So it's not that long ago we were over 3x gross to EBITDA -- gross debt-to-EBITDA. And we've said consistently that we'll invest where we see great opportunities that will deliver that 20% to 25% after-tax return. We -- when we make those decisions, we look closely at payback period. We look at our balance sheet, our capacity. We're comfortable with where the balance sheet is today. We expect the operating cash flow to be strong in the second half and even stronger the following half, so we're going to generate considerable cash from operations. We know that we're investing heavily, but as Chris said, we're doing that to build 30- to 50-year businesses. So to sum up: We're happy to go above 3x growth if we see that opportunity, but as we've said to our debt investors, we do it where we expect to see it [ delever ] relatively quickly. Onslow, on completion, will have a fantastic position on the cost curve. We'll generate reasonable learnings from a Mining Services perspective once that's turned on, so all of this is manageable.

Mark, just following up on that. And correct me if I'm wrong, but when you did get up to 3x net debt-to-EBITDA, that was followed pretty soon after with a pretty sizable sell-down of Wodgina, so is that the type of thing that you'd be considering, post completion of Onslow or any other project, in order to get leverage back to where you want it to be?

I was talking about the 3x gross that we just recently went to, but in terms of assets, we have no plans today to sell or dispose any of the portfolio. But we look at it from a portfolio perspective and we'll keep monitoring from -- and reassessing from time to time.

Yes, I got it. Secondly, interested in the opportunities that Chris touched on in terms of offshore for Mining Services, understanding obviously you guys won't be able to provide many specifics but just wondering. How do you think about the commodity spectrum; I guess, the jurisdictional challenges or risks? What's attractive? Clearly MIN has a lot of internal capability in lithium and iron ore. And in terms of jurisdictions, Canada or North America seem to be a pretty low hurdle for Australian companies, so are they the target markets to be thinking about for CSI? Or is that off base?

Not exactly Tier 1 countries we're looking at, but we think -- look. We think certainly the risk is very manageable, can't say a lot about it at the moment, but it's not -- we've always stayed pretty much stuck to Western Australia because we really can get as much growth out of it as we could afford to turn on, but I mean our size now is getting beyond Western Australia. And we've got some of these innovative pieces of kit that we've got and fairly highly sought after. Most of the big miners don't want to own it or operate it. They see us as being much more nimble, but look. It's we're going to put our toe in the water almost certainly and go and do at least one sizable project. And we'll find out. I mean we do understand too that, some of these jurisdictions, I mean, a number of Australian companies have been [ out on them before ]. And some of them have succeeded and some have failed, but I think we have to expand outside of WA sooner or later. And if we feel like we can manage the risk, we're going to give it a shot.

Got it. Do you need to see better margins in order to take on that risk for an offshore project?

Not necessarily. I mean we're fairly happy. I mean one of the things that we do really, really well is that we really keep our margins consistent in good and bad times. And our clients know it and customers know that, so they know exactly what service they're going to get from us. And if there's an opportunity to bump our rates up, we just don't do that. We're extremely consistent with it, so I -- our reputation as a very good, safe and -- with our people and safe that we'll always deliver, I mean that's something that's really important. That's why they want us, so I mean we've got to provide a service to our customers if we want a long-term relationship and all that boring stuff that people don't like to hear, but we've got to be consistent. We've got to deliver. And you just can't rip them off. And if I can -- I've grown the business in that way for 30 years and I'll keep doing it.

Your next question comes from Alexander Papaioanou with Citi.

Chris and Mark, just one for me. Following on from your comments regarding no legacy contracts and no forward contracts for the downstream product and the JV, can you give some more color as to how you envisage pricing and marketing would go going forward, especially given you're in discussions with OEMs?

Yes. Look. We're basically going to market our product based on indices. I mean we've always done that. So I don't like to hedge the dollar. I don't like to hedge our products, so I -- my intention is always to have it floating on a couple of the indices that are out there. And the indices on lithium have become quite reliable over the last sort of 12 or so months and not too different to the way we deal with our iron ore.

And in terms of discussions with OEMs, is that likely to change the way you deal with marketing?

No, I don't think so. I don't -- I just don't want to go and lock in prices because I'd rather it floated. And I don't want to take that risk. I mean we take the risk on the mining side and the OEMs, so they'll have to take their risk on the supply-demand curve.

We'll now move to the webcast questions. Your first question comes from Adrian Prendergast with Morgans Financial. With Wodgina continuing to ramp up smoothly, has it increased your view on where full nameplate capacity sits?

No, no. I think, look, if anything, hard rock mining on a worldwide scale is in its infancy. And I think our team are getting to understand different opportunities with the plant, so look. I think there's no doubt there's an opportunity to get the plant to produce more than nameplate, but I mean that's got to be done in conjunction with water supply, tails dams, a whole range of things, the mine plan. I mean the mine planning around lithium mining is very, very different to iron ore. You've got to know exactly sort of what's out ahead of you and you've got to make sure we got that blend coming in right, so it's complicated, but look. The answer is that I think there is no doubt these plants will produce more than nameplate. And I also think that Train 4 is likely going to be a bigger version of Train 1, 2 and 3.

Your next question is a phone question from Rahul Anand with Morgan Stanley.

Look, first one, perhaps for you, Chris, just around MARBL. I wanted to understand. Obviously you've got now 2 downstream conversion contracts available, 1 with Ganfeng; and the other, Albemarle. I just wanted to understand what some of the other perhaps covenants, if any, are. I mean, can you go and build conversion capacity per se independently without asking either of the 2 parties? Do they have first right of refusal? Is there any geography involved in any of these contracts? i.e., if you're building a plant, let's say, in China, that you have to be with a certain party out of the 2. That's my first question.

Okay, look. The answer to that is generally no. So with Ganfeng, no. We have made a commitment jointly with Albemarle. We want the on -- exactly where the first 100,000 tonnes coming out of Wodgina goes because you simply need to do that to have the planning and the build and the capital, but beyond that, we are looking together on where to build the next plant. But we're not committed that we have to build it together. So for example, if we do a study on building one in Wodgina and one wants to build it there and one doesn't, then one can do it independently of the other.

And is there a first right of refusal in terms of you building that plant? Or you can do that without asking them, basically.

No, no. What we want to do is we want to be good JV partners, and we want to work together wherever we can. I mean that's our first objective, but if one decides that it's better that they build a plant, I don't know, in the states and we want to build at Wodgina, we have the right to sit down and have that conversation and then for us to go ahead and build where we want.

Understood, okay. And just one follow-up there, Chris. In terms of the Chinese plants, is it fair to think that your marketing team is going to target the domestic Chinese market for that product? And some of the other Western suppliers, perhaps you're going to look to build conversion capacity outside China like we're seeing in the industry.

I think, yes, look. Generally speaking, yes, I think you're right on both of those, but in saying that too, I mean, there's equal opportunity for us to be able to market that product outside of China as well. Both of them have sort of got hooks and barbs with them. And when you send product out of China, you're subject to a VAT. When you sell it internally, then it's a process to get the cash out, so I mean we'll be looking for a number of reasons to balance those sales as well for some of it to do with cash flow.

Understood, okay. And one for Mark, please: Mark, I just wanted to follow up on that debt question a bit. Can you maybe perhaps help us understand some of the covenants around the debt that currently exists? I mean, where can you take the balance sheet to perhaps in terms of net debt-to-EBITDA, gearing, interest cover? Like what type of metrics should we be looking at; and be making informed decisions around any sort of commodity, volatility and how that might impact the balance sheet?

So we have a senior facility which is undrawn which is effectively a $400 million line, which has traditional sort of [ debt covenants ]. The bonds that we have in place, [ I think ] the key issue is that we pay the interests. If we pay the interests, we're okay. There are other restrictions in terms of dividends and so on that kept the ability to pay dividends in certain circumstances and so on. If we start -- well, if we start, our problem is with the interest payment basically, but that's it. So one of the attractions of the debt package that we've got in place is the flexibility it's given us.

Thank you. There are no further questions at this time. I'll now hand back to Mr. Ellison for closing remarks.

Okay, thanks. Look. Thanks, everyone. Thanks for coming online. Thanks for all of your support during the year. We are on a road show on Monday and Tuesday at Sydney and Melbourne, so we'll catch up with the lot of yous there. And no doubt you'll have some more questions by then, but look. Thanks for coming online today and thanks for your time. And we'll see yous all shortly. Good morning.