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.