KUALA LUMPUR: Malaysia Smelting Corp
Bhd’s (MSC) performance was affected by the sharp drop in tin prices, which was reflected in its third quarter (3Q22) report.
Fears of a global recession, lower tin demand due partly to China’s zero-Covid policy and easing of scarcity as smelters resumed operations saw prices of tin fall by 26% year-on-year (y-o-y) to RM104,700 per tonne in the quarter.
MSC was also impacted by higher freight and energy prices during the period.
However, it is expecting improved production yield and efficiency from the use of the more efficient Top Submerged Lance furnace technology at its Pulau Indah smelting facility to absorb cost pressures.
“We expect to generate cost savings of 30% with lower manpower and carbon emissions,” said group chief executive officer Datuk Patrick Yong in a statement.
“As for our tin mining arm, we are continuously exploring ways to enhance our mining productivity at the Rahman Hydraulic Tin mine in Klian Intan.”
For 3Q22 ended Sept 30, MSC posted a net loss of RM31.3mil, or loss per share of 7.5 sen, on RM344mil in revenue (versus a net profit of RM28.9mil on RM218.5mil revenue in 3Q21).
It said its smelting arm posted a net loss of RM46mil in the quarter as compared to a net profit of RM4.9mil in the same quarter of the previous year.
Meanwhile, net profit for the mining operations fell by 72.6% y-o-y to RM8mil on the back of lower tin prices and a one-off provision for legal case settlement of RM4.7mil.
The loss in 3Q22 was exacerbated by longer-than-expected furnace outage, it said.
For the nine months, MSC’s net profit was up 34% y-o-y to RM72.5mil, or earning per share of 17.2 sen, on the back of a 35% y-o-y rise in revenue to RM1.1bil.
The jump in revenue and profit was mainly driven by higher average tin prices over the period and after taking into consideration the softening prices in 3Q22.
“We are strengthening MSC’s foundation to allow us to better address the challenges and withstand external headwinds.
“Nonetheless, tin’s long-term prospects remain positive as tin has been identified as a key component in emerging technologies including for lithium-ion batteries for electric vehicles,” Yong said.
