And so that’s why we have said for these Q3 shipments and Q4 shipments, early Q4 shipments, we don’t expect to see much impact until Q1. You can expect – certainly, our intention is to also sell oxide as oxide. And so there are a variety of different contracting structures we have. Some are a little bit shorter term, some are longer term. But this transition as we go from effectively selling 100% of our con to consuming a significant amount of our con and then needing to get through this initial filling of the channel is what’s driving this change. And so if you think about why it takes as long as it does, I will just give you sort of a rough walk. If you think about getting it to port from Mountain Pass could spend a week at port, it’s probably about three weeks at sea and then it needs to get converted if we are talking about metals.
So, that could take up to a month. And then we got to get it to the customer. So, that’s 2 months to 2.5 months. Once we fill that channel though, that impact for us gets lapped very quickly. So, that’s what’s occurring in the background right now, and we look forward to getting that channel filled, so we can start showing you some oxide metal revenue in the P&L.
Corinne Blanchard: Alright. Thank you. And then maybe as a follow-up on the expansion, and maybe you touched on this before, I apologize if you did, but where do you think you would be placing the volume? Meaning, like, how does that fit that expansion with the demand?
Jim Litinsky: I apologize, Corinne. Can you ask that again?
Corinne Blanchard: Yes. For the expansion that you were talking about, like 50% expansion by – over the next 4 years, just wondering what the capacity of the market to absorb those additional volumes. So, just high level, like how do you view this?
Ryan Corbett: Sure. Yes. Sorry. We were just having a little trouble hearing you first. But I think you are asking about the expansion and where we expect to sell those volumes. I think the important thing to keep in mind is as we transition to selling oxide and metal from concentrate, those volumes, that over 40,000 tons of production that we are making today, historically has been sold primarily into the Chinese market and no longer will be as a con product. And so there is absolutely separation capacity for an additional 20,000 tons. We have no concern about that. And then we are also pretty pleased with what we have seen in terms of development of various ex-China sources. And so we feel very good about the ability to place that volume. And just given all the dynamics that Jim touched on given the timeframe that we are talking about, we feel very good about bringing that incremental volume to bear into the market.
Corinne Blanchard: Okay. Thank you.
Operator: Thank you. The next question is from the line of Bill Peterson with JPMorgan. You may proceed.
Bill Peterson: Hi. Good afternoon and thanks for taking my questions. I wanted to come back to the market that Jim was describing as related to the question around pricing. So, you – yes, clearly, EVs and wind is challenged, but I think you have also kind of seen some challenges in even kind of the more traditional uses, which I think accounts like you talked about 75%. So, assuming that’s still week two, where do you see pricing being held up? Do you see pockets of supply coming offline? And then I guess looking ahead, your peers recent permanent expansion in Malaysia, do you think that could lend – lead to further supply discipline for China as they think about first half ‘24 quotas?
Jim Litinsky: Well, as far as quotas, I would tell you that it’s always difficult to read tea leaves in China. And we try to do our best, but I don’t have a view on that for next year. I do think – I have said historically that. And I think that their behavior has followed this, but if you think about the evolution of the electrification world, specifically EVs, and you see there was a big BYD price cut announced in some markets just – I think it was today or maybe it was yesterday. But with the Chinese having moved downstream, I think that you are seeing a transition – a strategic transition to focus on making sure that there is supply growth to feed their downstream industry, but not enough supply growth to subsidize the Western competitors.
And so I do think that, that speaks to, again, sort of continued discipline, but for discipline around, they will make sure that there is a reasonable amount of supply for their own producers and those producers are growing quite substantially. As far as – and hopefully, this – it’s a great question, Bill. I think as far pricing now with all of these headwinds, I view that – you have to take this with a grain of salt because I run a rare earth company, but I view that as very bullish in the shocks that this market has absorbed this year when we think about the vast majority of demand still being the straight GDP industries that have been severely impacted in China and when we think about the slowdown in recent months with EVs and the wind turbine projects canceled.
And so I think though it does speak to the reason you asked me what the reason is. And I think the reason is the math, right, is just – there is a lot of demand for this stuff. And supply meets demand somewhere there is demand destruction when prices get too high, but then there is also more demand when prices go lower, and those meet – those curves meet. And so I meant what I said when I think that there is – down here in the 60s and the 70s, it’s just really difficult. You certainly – at these prices in the 70s, I frankly don’t think if I were looking out certainly anywhere in the world outside of China and then China has its own realities. But anywhere in the world, I think you would have to be crazy to be an investor in a rare earth project, a greenfield, unless NdPr prices were at least 120, 140, substantially higher from here, if you want any kind of reasonable return on your capital for the risk and the time.
And so to me, that just speaks to – there is just going to be Western world supply constraint, and it speaks to the economics down here. And so I do think, again, we are kind of bouncing along this bottom. I don’t know if it lasts another month, another year or 2 years, but those are my general thoughts around kind of medium and longer term tailwinds.
Bill Peterson: Thanks for those insights. I wanted to ask about Stage 3 with my second question. So, I guess how should we think about this progress on the construction and equipment setup? I may have missed it, but are you still expecting to begin alloy production by the year-end this year? And I guess what are the key sort of milestones we should be looking out for with Stage 3?
Jim Litinsky: Yes. No, great question. So, things are going really well in Stage 3. We have made a lot of progress. One point of note for those who don’t know, there is – the big pieces of when you take oxide, the big pieces that get to a magnet are metal, alloy and then magnet. And actually in working with our primary customer and other discussions, we actually shift the focus to metal, internally produced metal, because that’s really more of a salable broader product. And actually, we are making in pilot scale metal today. So, that is a big achievement for the Stage 3 team. So, we are on track. And then certainly, with respect to alloy, that’s never sort of a long-term business, the goal is magnetics, right. The goal is to make magnet.
