EVERYONE knows Malaysia's early wealth was built on tin. Then, one could say tin was “in.”
Even 20 years ago, tin still had a place in the economy as a quick look at the KLSE stock pages reveals. There were 27 companies trading under the “tin” category in 1983.
But take a look at the KLSE trading pages today, and it's obvious tin has all declined in importance to the Malaysian economy.
Only two companies – Kuchai Development Bhd and Tronoh Mines Bhd – are now listed under the “mining” category. Even then, both are no longer in tin or mining directly.
Tin companies began diversifying in earnest in the mid-1980s when the bottom fell out of tin prices. Not surprising, many of them went through bleak times.
In the main, most found a “second life” in property. Kuchai made a foray into property, as did Ayer Hitam Tin Dredging Malaysia Bhd, Kamunting Bhd, Austral Amalgamated Bhd (now Furqon Business Organisation Bhd), Petaling Tin Bhd, Selangor Dredging Bhd and Talam Mines Bhd.
Others ventured into financial services, plantations and infrastructure services.
Many of the companies fell into years of losses and uncertainty; a few underwent a number of corporate restructuring exercises before being rescued by white knights.
Unfortunately, there are still those that are in need of resuscitation.
Aokam Perdana Bhd went into the timber business, but has also found it tough going and is now languishing in PN4 condition as a result of its shaky financial position.
Also in PN4 condition is Kelanamas Industries Bhd, which under a proposed restructuring exercise could see a reverse takeover by a plastic product manufacturer.
Meanwhile, Berjuntai Tin Dredging Bhd's proposal to go into the manufacture of rubber gloves is still pending.
Kramat Tin Dredging Bhd – a Malaysian Mining Corp Bhd (MMC) unit – has been classified a PN10 company for its lack of a core business, and many are still speculating what the owners have in store for it.
Two former mining companies no longer exist as listed entities. Pahang Consolidated Bhd was de-listed in the mid-1980s by the KLSE, while Kuala Kampar Tin Fields, which became MMC Engineering Bhd, was taken private this year by its parent company, MMC.
Yet others have managed to tunnel out of the mines and transform themselves into conglomerates.
Renong Bhd rose to the heights of prominence in the 1990s, and had stakes in tolled roads, oil and gas, construction, infrastructure, utilities, hotels, and telecommunications companies, but saw its empire wobble precariously in the wake of the Asian financial crisis of 1997-1998.
The company recently resumed listing status as UEM World Bhd, but only after the government stepped in with a restructuring plan and took the biggest stake in it.
Not many know this, but YTL Corp Bhd was previously Hongkong Tin plc.
But of all the tin companies of yonder years, MMC is perhaps the most “alluring” or interesting.
The Syed Mokhtar Al-Bukhary – it is controlled by the enigmatic Tan Sri tycoon – factor aside, MMC was once reputed to be the biggest mining companies in the world with interests in tin mines in Malaysia, and gold and diamond mines in Australia, held via Plutonic Resources and Ashton Mining Ltd.
In 2000, the company decided to sell its Australian interests and to use the proceeds back in Malaysia in ports and power plants where it has become a major player, as it has similarly in construction, infrastructure, rail and airports.
MMC also has stakes in two other mining companies, Kramat Tin and Tronoh Mines Bhd, the latter currently being transformed into a construction powerhouse.
But MMC still maintains an interest in tin through Malaysia Smelting Corp Bhd (MSC), of which it is a substantial shareholder with a 38% stake.
MSC accounts for about 15% of the world's tin production. It is a leading integrated producer of tin metal and tin-based products and also a global leader in custom tin smelting.
MSC holds a 75% stake in Indonesia's PT Koba Tin and a 30% interest in Australia's Marlborough Resources NL, and has said it wants to acquire more tin mines.
Also on its shopping list is a 25% interest in ZR Networks Sdn Bhd, which owns the mining rights of Rahman Hydraulic – the largest tin mine in Malaysia.
To the delight of tin owners, tin prices have risen to over US$5,000 a tonne currently.
MSC maintains tin mining is still a very viable business. Its net profit of almost RM24mil for its financial year ended Dec 31, 2002, proves mining can be profitable for those that can mine competitively.
For the rest, it makes sense to move on to areas in which they can compete.
Much like Malaysia's own diversification over the decades.
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