KUALA LUMPUR: While Malaysia’s gold industry has been dominated by its downstream sector, it is interesting to note that the upstream sector has grown three-fold in the past decade, to RM780mil in 2015 from RM211mil in 2006.
Little is known that Malaysia’s gold production came from its 14 mines in Pahang, Kelantan and Terengganu and as of 2015, Pahang alone accounted for 74% of the country’s output.
Malaysian Chamber of Mines’ executive director Muhamad Nor Muhamad said the industry’s growth was driven by the higher output and rising gold price.
“The contribution from the upstream sector was fairly significant, producing 4.73 tonnes of gold worth RM780.8mil and exporting 4.06 tonnes of smelted gold worth RM523.4mil in 2015, he told Bernama.
He said gold was primarily exported to Australia, Singapore, Switzerland, Hong Kong, the United Arab Emirates and Thailand.
The exports are in the form of “dore bars” – semi-pure alloy containing 85% gold and the balance either copper, silver, lead, zinc or selenium.
“They are then exported for refining into 99.9% gold bars.
“However, the smaller producers usually sell their gold ores to local goldsmiths who then smelt and refine them at their own premises for making into jewellery,” he pointed out.
Muhamad Nor said Malaysia did not have a gold refinery as most of the precious metal, after being smelted, would be exported to be refined in other countries especially by major miners.
“The major producers in the country are often associated with big international gold players who have their own refinery in other country,” he said.
On the presence and involvement of foreign investors in local mines, he said, it was due to the high capital investment needed as well as expertise to carry out the mining works.
A few years back, he said, there was a plan to build a refinery in Sepang, Selangor, but it fell through due to constraint such as, in sourcing adequate raw material to feed the plant.
On industry outlook, Muhamad Nor said, the exploration activities undertaken by the Department of Minerals and Geoscience Malaysia had identified several areas with anomalous gold in Johor, Kelantan, Pahang, Sabah and Sarawak.
“This means that our gold industry has the potential to sustain mine production at its historical level for several years to come,” he said.
Since 1972, gold output reached its highest of 4.739 tonnes in 2003 before declining to 2.794 tonnes in 2009 and bouncing back to 4.732 tonnes in 2015.
However, the major factor that would make the mines feasible is the gold price which in 2015, had averaged at US$1,160.11 per ounce (oz), he said.
As of today, gold price stood at US$1,206 per oz and had reportedly touched its highest to-date of around US$1,256 on Feb 24.
While the upstream sector continues to grow, Muhamad Nor said, the more significant contribution came from the downstream sector whose economic value had far exceeded the upstream.
“Of significance is the contribution by the downstream sector which imported gold for making into jewellery and accessories not only for the domestic but also the international market,” he said.
This was reflected by the value of gold imported to produce jewellery which in 2015 alone, the country imported 77.53 tonnes of gold valued at RM11.07bil mainly from Switzerland, UAE, Singapore, Turkey, Hong Kong, the United States and Thailand, he said.
Meanwhile, Federation of Goldsmiths and Jewellers Association of Malaysia President Ermin Siow said Malaysia was a significant gold jewellery exporter, of around 50 tonnes annually worth between RM6bil and RM8bil, mainly to the Middle East countries.
He said this far exceeded domestic usage of 20-25 tonnes annually.
“For plain gold jewellery exports, I would reckon we now rank among the top five in the world,” he said. – Bernama