MSC on a roll as tin prices rally
THE current rally in tin prices is a boon for Malaysia Smelting Corp Bhd (MSC), especially since its tin mining and smelting operations were affected by the Covid-19-led movement control order last year.
The global tin mining and smelting group will focus on strengthening its core operations for increased operational and cost efficiencies.
According to group CEO and executive director Datuk Patrick Yong, the high tin prices are favourable to MSC as “it will directly benefit to the bottom line of our tin mining segment.”
He foresee tin prices to be fluctuating range bound, but generally sustainable in 2021 on the back of recovering tin demand.
“Currently, we are witnessing demand outpacing supply, as inventories run low, leading to a surge in tin prices.
“The high tin prices will also incentivise more mines to increase the supply of tin-in concentrates, which will benefit our tin smelting business.
“We also expect to see an emergence of tailings reprocessing soon, ” Yong explains to StarBizWeek.
In 2020, the supply chain of tin ore was affected due to Covid-19 containment measures and trade restrictions.
MSC also expects the situation to improve this year as trade activities normalise with the re-opening of economies and borders following the rollout of national vaccination programmes worldwide.
“In 2021, we expect less disruptions to our mining and smelting activities, which will contribute to improved production efficiency, ” says Yong.
As an integrated tin producer, MSC’s core operations comprise both upstream and midstream activities of the tin value chain through the group’s international tin smelting business, and local tin mining operations under its fully-owned subsidiary Rahman Hydraulic Tin Sdn Bhd (RHT).
MSC is phasing out its 119-year old iconic tin smelting plant in Butterworth, Penang.
The group’s new international smelting plant in Pulau Indah, Klang has commenced its operation last year.
Yong says: “For our smelting division, we continue to undertake testing and commissioning works at the new Pulau Indah smelter. Currently, the state-of-the-art top submerged lance furnace is running at 30% capacity.
“We plan to gradually ramp up production there (Pulau Indah) and expect to increase to full capacity by end of this year or early 2022, barring any unforeseen circumstances.”
Having said that, MSC will continue to operate the Butterworth plant in parallel until the Pulau Indah smelter reaches a steady state.
“We need to ensure proper controls are in place at Pulau Indah before gradually shutting down operations at the Butterworth smelter.
“It may take up to a year or more for us to totally phase out production at Butterworth and start with decommissioning activities, ” Yong points out.
Meanwhile, the group expects its export volume to return to pre-Covid 19 levels in line with the higher refined tin production.
“This is as soon as our Pulau Indah smelting plant is in full operation, ” adds Yong.
The total investment for the Pulau Indah facility is about RM150mil, of which about RM50mil is for the plant purchase and RM100mil for the refurbishment and upgrading works.
On the group’s tin mining operation, Yong says MSC looks forward to higher daily mining output with the introduction of new technologies and process mechanisation at its RHT tin mine.
“From a daily production at RHT of 9.5 tonnes per day in 2020, we have already reached 11 tonnes per day.
“Our efforts in acquisition of land to increase our mining output is prioritised and we hope to reach our target of 12 tonnes in a year or so, ” adds Yong.
“We remain steadfast in increasing our daily tin ore production at the RHT tin mine in Klian Intan, Perak.
“This is by enhancing our mining processes through mechanisation and introduction of new technologies such as the mobile crushers, floatation cells and spiral separation units.
“At the same time, we continue to undertake exploration activities of new tin deposits.”Meanwhile, the mining activities at MSC’s new mine in Sungai Lembing, Pahang have started with modest production.
The group is looking forward to higher output in 2021 as full commercial production begins, says Yong.
In addition, MSC is planning for a tailings processing plant as “the current tin price level justifies the cost in further extraction in the previous discards.”
On whether the high tin prices will continue, Yong expects them to hold up as the demand for tin increases and supply remains low.“With the physical tin supply chain tightness in the United States and Europe, as well as container shipping complications in Asia, it will take some time for tin supply to be replenished, ” adds Yong.
As the workand study-from-home trend continues, the consumption for solder is also expected to grow in line with increasing sales of consumer electronic devices and appliances.Over the long term, he says demand for the metal will be driven by the growing application of tin in various industries, such as the electric vehicles (EVs), energy storage markets and renewable energy space, to name a few.
As the research and development (R&D) on the metal intensifies, Yong says: “We will see more potential new usages for the metal. These applications include the usage of tin in lithium-ion batteries for electric vehicles, which is expected to rapidly grow.”
According to the International Tin Association (ITA), tin prices have been rising up by over 30% so far this year amid tightness in the physical supply chain in both the United States and Europe while flows from Asia have been disrupted by backlogs in the container shipping market.
At the same time, consumption for the metal continues to be strong due to the higher demand for EVs, growth in US home-building, and as remote working boosted demand for computers and other electronic devices.
ITA noted the global market has been in a supply deficit for the last three years.
Furthermore, there is room for further upside momentum as the near-term supply gap can only come from expansion or revival of existing mines given the time it takes to get a permit for and dig a new mine.
Tin price on the Kuala Lumpur Tin Market closed firm at US$27,500 per tonne yesterday,
The metal on the overnight benchmark London Metal Exchange was traded at US$26,715 (RM109,785) per tonne.