Hitting pay dirt on tin

TIN miner and metal producer Malaysia Smelting Corp Bhd (MSC) has remained busy despite challenges in the global environment.

MSC co-chief executive officer Nicolas Chen Seong Lee says the group, like all businesses, is being affected by higher energy costs due to the conflict in the Middle East.

“Both mining and smelting activities are energy-hungry activities, and for the mining segment, we consume a lot of diesel,” he tells StarBiz 7.

Chen says, nevertheless, that the higher production costs are being offset by the current high price of tin.

“For the smelting side, we use natural gas as energy, and thus far, suppliers of electricity and natural gas have not announced changes to tariffs and charges.”

The group, which is involved in the upstream and downstream segments of the tin industry via tin mining and custom smelting, recently said it will spend RM10mil to build a new rotary furnace at its Rahman Hydraulic Tin (RHT) operations in Klian Intan, Perak.

Analysts expect this to strengthen its upstream operations and help it achieve a more integrated workflow, lowering transportation costs and enhancing security.

“We are also in the middle of testing and commissioning a tin tailings scavenging plant at our mine site.

“This new plant will process sand containing small amounts of tin and is expected to increase our production of tin concentrates by up to three tonnes per day,” Chen says.

Previously, the company discarded the sand as it was not economical to extract the tin.

The company is also targeting to increase the supply of tin ore from local sources to reduce its smelter’s reliance on foreign ore.

“This new plant will assist in that target and we are also looking for other potential tin mining opportunities in Malaysia.”

Chen says the supply of foreign ore is subject to factors beyond the company’s control, such as geopolitical issues, which can have a ripple effect on the availability, logistics and related areas.

He notes that the availability of tin from Indonesia and Myanmar has also been affected, while other smelters have been aggressively sourcing a reduced supply of ore.

In this regard, smelters in China have deep pockets and have been disrupting supply by offering very aggressive terms to suppliers, Chen adds.

“In addition, we will be building a mini smelter at the mine site to process ore into crude tin. The crude tin will be sent to our smelter in Pulau Indah for further refining.

“This will be more efficient in terms of handling materials discarded after extracting tin from the ore.”

The mini smelter is expected to be ready by the third quarter of this year.

In terms of cost management, Chen elaborates that the group has been exploring various measures for some time and has, in fact, implemented some, including the use of green energy.

“We currently harvest solar energy at the smelter and have plans to do the same at the mine site.

“The group continues to explore the addition of alternative energy sources where possible and as needed,” he adds.

Rare earth venture?

Meanwhile, amid expectations that the company may venture into the rare earth segment, Chen says MSC is currently testing and conducting analyses to determine the types and quantities of rare earth elements present at its mine sites.

“If commercially viable, we will then need to ascertain the extraction processes required, to what extent we are able to process them, the setup costs, licensing, available expertise, and so on,” he says.

He reckons there are many “moving parts to this”, not to mention government policies on rare earth.

“As such we are not able to provide definitive answers at this stage. For now, we are continuing to focus on tin.”

Chen says challenges facing the industry are varied and include regulatory issues.

“Late last year, our mine was shut down for three weeks due to river pollution issues, even though our mine was not the source of the pollution.

“The costs of production and availability of ore are also key challenges, alongside factors beyond our control, such as the curtailed supply of natural gas for three months in 2025 due to a gas pipeline explosion in Putra Heights.

“But potentially, the biggest challenge we may face is if there is a shortage of energy – how the government would react and what policies it would implement.”

In a note to clients, Public Investment Bank says it is optimistic on MSC, underpinned by “expectations of elevated tin prices driven by a sustained structural deficit, as well as meaningful improvements in MSC’s mining division, where operational efficiency and recovery rates are steadily improving.”

The brokerage notes that tin prices as at April were hovering around US$50,000 per tonne on the London Metal Exchange, although they recently spiked to almost US$57,000 per tonne following the outbreak of the Iran war.

This marks a rise to near-record levels, compared with the US$30,000 to US$40,000 per tonne range observed throughout 2025, it says.

The price surge is being driven by supply concerns in Myanmar and Indonesia, coupled with growing demand from the energy and digital transitions, amplified by speculative positioning set against a backdrop of tight inventories on major metal exchanges, it adds.

At last look, MSC shares were trading at RM1.89, valuing the group at RM1.59bil.