Tin miners in M'sia seek new leases on Chinese demand
Tin miners in M'sia seek new leases on Chinese demand
Bloomberg, Kuala Lumpur
Malaysia, the world's largest tin producer in 1980, now consumes more of the metal than it unearths. Malaysia Smelting Corp. wants that to change.
"There is still viable mining ground," said Chua Cheong Yong, who manages the commercial division for Penang-based Malaysia Smelting, the world's No. 3 tin producer. "Whatever potential there is, we should realize it."
Miners want to revive Malaysia's tin industry because China's surging economy and a European Union ban on lead in electronic products from 2006 have pushed tin prices to a 15-year high of US$9,000 a ton on the London Metal Exchange.
Malaysia's federal government backs the miners. It says it will persuade state governments that a possible $9 billion bounty from tin makes it worth digging up land that could be used for factories and hotels. States control mining leases.
"We're encouraging the states to consider tin by explaining the potential," said Isahak Yeop Mohamad Shar, secretary-general of the Ministry of Natural Resources and Environment. "We're confident by doing this we can trigger something."
Malaysia still has 1 million metric tons of tin reserves, according to a U.S. Geological Survey study in the 1990s, the latest available. That's the world's second-largest stash after China's 1.7 million metric tons.
Malaysia was the world's ninth-largest tin producer last year, according to the World Bureau of Metal Statistics. Indonesialed the rankings, followed by China and Peru.
Most Malaysian tin mines shut in the mid-1980s when prices plunged as beverage makers switched to aluminum cans from tin- lined steel containers. From more than $35,000 a ton in 1980, tin prices fell to less than $4,000 a ton in 2000.
Manufactured goods now account for more than 80 percent of Malaysia's exports, replacing commodities such as tin, oil, timber, palm oil and rubber as the main growth-drivers. Tourism is the second-largest foreign exchange earner.
Malaysia could more than double tin output to as much as 10,000 tons a year, said Malaysia Smelting's Chua. The company currently imports tin ore from countries like Australia, and is exploring for more metal in Indonesia.
The booming economy in China, where gross domestic product increased 9.1 percent last year, is helping drive interest in Malaysia's reserves. The government forecasts the $1.4 trillion economy will expand 7 percent to 8 percent this year.
The biggest consumer of tin, China can't increase its own production fast enough to keep up with demand, said Xiao Jianming, chairman of Yunnan Tin Co., the country's largest producer.
This year alone, China's demand will rise 10 percent to 80,000 tons, he said. "We can increase production only slightly," Xiao said.
The European Union's ban on lead in electronic equipment also is boosting demand. Osaka, Japan-based Matsushita Electric Industrial Co., the maker of Panasonic televisions and stereos, and Tokyo-based computer maker NEC Corp. have started using lead- free solders.
Two of the biggest uses of tin, which doesn't react with moisture and has a lower melting point than lead, are as a corrosion-preventing coating for other metals and as a component in solders used to connect electronic components.
The switch from lead will increase world tin demand by 30,000 tons a year, or about 10 percent of annual production, according to Tin Technology, a research institute based in St. Albans, England, and funded by tin producers.