1.0 Preamble
The Malaysian mineral commodities sector since 1990 has experienced an overall commendable growth in performance although the metallic mineral sub-sector showed a general declining trend due to the exhaustion of its main component mineral, tin. The growth has largely been due to the contribution of the non-metallic mineral sub-sector which has offset the declining production of tin and its by-products. The major factor contributing to the impressive growth of this sub-sector has been the country's vibrant property and construction industries.
Over the last couple of years, the mineral sector's contribution including oil and gas to the country's Gross Domestic Product (GDP) has continued to be maintained at the 7 per cent level.
According to the Geological Survey Department, an agency of the Ministry of Primary Industries responsible for the development of the country's mineral commodities sector, Malaysia is endowed with over 30 mineral resources that can be exploited. Despite the country's favourable geology, past mining legislative and regulatory systems in Malaysia have been poorly devised and are presently antiquated and not competitive enough in attracting investors, both local and overseas, to the industry. The highly unusual and unique nature of the Malaysian mineral industry which centered solely around alluvial tin mining had somewhat resulted in Malaysia's existing mineral climate lagging behind in competitiveness for major investments in the industry for other minerals.
To help arrest this, a new National Mineral Policy was formulated during Malaysia's Sixth Malaysia Plan period to provide the foundation for the development of an effective, efficient and competitive regulatory environment for the mineral sector. The Seventh Malaysia Plan, the country's economic blue print covering the period 1996 to 2000, which was unveiled mid-last year envisages the Policy to be implemented soon. The new National Mineral Policy is expected to revitalise the industry and propel Malaysian mineral investments into the next millennium.
2.0 Changing Paradigm in Malaysian Mineral Investments
Since the early days of the mining industry in the country, mineral investments have mostly centered around the discovery for tin. Prospecting and exploration projects aimed at locating tin deposits utilised very simple antiquated methods due to the nature of alluvial deposits being widely distributed just below the ground surface. The mining methods employed to recover tin were fairly straightforward mainly utilising the gravel pump, open cast and dredging methods. They do not require very complex mining operations and techniques.
The capital investments required in the exploitation of Malaysia's alluvial tin resources have, therefore, been relatively modest except for dredging. Nonetheless, Malaysian miners through their decades of tin mining experience are very skilled and are experts in alluvial mining operations and their state-of-the-art technology.
With the depletion of secondary alluvial deposits and the need to discover the primary lode deposits for all types of minerals, there is now a paradigm shift in Malaysia's mineral investments that will centre around the introduction of more complex techniques and modern mining technologies involving higher risks capital investments. New exploration, prospecting, mining and mineral processing techniques are required to be introduced to discover and recover the more complex and delicate primary lode deposits with some even containing low grade refractory ores.
New techniques for waste disposal and waste management system are also needed to be introduced in order to met the likely new challenges, in dealing with the more complex tailing disposals and waste water treatment. The concern for environmental sustainability has also formed an important critical aspect of any new mining project. Society's growing awareness towards environmental pollution hazards has to be factored into the overall planning and developmental consideration of all future mining activities.
Encompassing all these new needs and considerations will, therefore, translate into a mineral investments requirement exceeding far beyond those in the past. Very few Malaysian companies on their own have the capability and capacity to bear these challenges alone. They would necessarily have to seek joint-venture partners with foreign companies who have the skills and the big risks money.
3.0 New Mineral Policy to Help Rejuvenate the Industry
As mentioned earlier, a new National Mineral Policy has been formulated by the Malaysian government and is just now awaiting implementation. The Policy aims to enhance Malaysia s competitive advantage in the globalised market for mineral commodities and their value-added products, as well as to maximise the usage of research and development, mineral and geoscientific information with due emphasis on environmental protection and sustainable development.
Under the Policy, the diversification and expansion of the mineral industry will entail the development of other potential minerals apart from tin. The diversification efforts extend to both the extraction of minerals as well as the development of its downstream industries.
The new National Mineral Policy also emphasizes on the need to provide an attractive, efficient and stable mineral sector regulatory framework. Federal and State laws which are outdated will be phased out or amended and harmonised to conform with current needs.
The Policy has introduced security of tenure in that the holder of a current and valid licence granting a right to prospect and explore shall be given the first right of refusal for a mining lease should a deposit be discovered in the licenced prospected area. However, the right to a mining lease is contingent on the discoverer's preparation of acceptable documents and development plans as required by the relevant law. The Policy will also provide a fiscal system which is stable, fair, transparent and competitive.
All in all, the new National Mineral Policy is aimed at creating a conducive investment climate for both local and foreign companies to exploit and economically recover the country's mineral resources either on their own or jointly with others.
4.0 On-going and Future Mining Ventures and Prospects
The future development for the Malaysian mineral industry will be in the direction of hard rock and eluvial mining which of necessity will require major local and foreign risk capital and investments. The Government under the new National Mineral Policy recognises the importance of promoting foreign investments by giving the necessary preferential treatment to joint ventures and co-operative projects. Even now this is already being practised in some Malaysian states. Examples are in the current gold mining projects in Pahang where there are already several joint ventures between foreign and local subsidiary companies of the state government. The state of Pahang is presently the focus of major gold mining activities in Peninsular Malaysia. Late last year, a joint-venture company has started to produce gold expected at the rate of 3 tonnes a year, the single largest stand-alone gold mine in the country. It is expected that another three joint-venture operations will start gold production middle of this year. Pahang by then will be the largest gold producing state in Malaysia.
In the East Malaysian states of Sabah and Sarawak, interests for gold prospecting have surged of late following the major gold strike at Busang, in neighbouring East Kalimantan. Several local and internationalmining companies have been undertaking exploration work in these states.
The quickest way to introduce and hasten hard-rock advanced technology in the mineral industries is through mergers or rehabilitation of existing mines with technology transfer from foreign partners. A good example of such was the development of the Mamut Copper Mine in Sabah, East Malaysia where there was excellent co-operation between the United Nations, the Geological Survey of Malaysia, the Overseas Mineral Resources Development Company of Japan and local entrepreneurs. The Mamut Copper Mine is Malaysia's only copper producer today. Adjacent to it in the Bidu-Bidu hills is the prospect for the mining of some 5 million tonnes of copper worth around RM6 billion. Malaysia Mining Corporation is presently looking for codevelopers to develop their complex polymetallic sulphide copper deposit in Mengapur, Pahang. There could also be the possibility of rehabilitating the country's largest underground tin mine in Sungei Lembing, Pahang with suitable new technology and capital.
Malaysia Mining Corporation Berhad has been active in the mineral industry not only of Malaysia but also other countries such as Myanmar, Canada, Laos, Vietnam, Australia, Mongolia and the CIS. Through its interest in Plutonic Resources Limited and Ashton Mining Limited, MMC ranks as senior producers for gold and diamond. The Government encourages this sort of reverse investments. Together with its other subsidiaries, the MMC group has also been very active in identifying new and advanced projects for acquisition and joint-ventures in Malaysia and the world in their effort to strengthen their diversified base and opening new mining horizons.
Established mining consulting and engineering companies such as Osborne & Chappel International Sdn. Bhd. have diversified from their traditional tin sector business to offer their expertise to the wider minerals market. They have joined-up with foreign consulting groups to undertake various assignments and projects providing consultancy services worldwide including the preparation of EIA reports.
Consortiums of Malaysian miners have been established, from time to time, to explore for investment opportunities in foreign mining countries such as Vietnam, Mongolia, Africa and others. The Malaysian government and its agencies organised technical and economic missions regularly to prospective mineral producing countries to pave the way for Malaysian miners to pursue such co-operative ventures in these countries either on their own or in a larger group.
The Malaysian Chamber of Mines, representing the national mining industry interests of the country, regularly receives delegations from overseas mining interests to discuss and explore the possibility of linkages and co-operation in the minerals industry. The Chamber indeed supports and welcomes these initiatives. On behalf of its members, the Chamber is currently pursuing efforts to explore joint-venture possibilities with its counterparts in neighbouring ASEAN countries for their members to join together in investments in their respective minerals industry.
5.0 Opportunities to tap Malaysia s Skills, Technology and Investments
Despite the decline in tin mining in Malaysia, there are plenty of highly skilled Malaysians available for utilisation of their expertise especially fordeveloping countries such as Mongolia, Vietnam and Africa which have good potential for alluvial tin mining activities. As Malaysia has been the pioneer and in the forefront in the field of alluvial tin mining, Malaysian expertise and technology could fit in very well for the mining operations in these countries.
Malaysian miners are highly skilled in mining operations utilising the dredging and the gravel pump methods. Both have been the major mining methods employed to recover tin and could be successfully applied for other alluvial type of mineral deposits such as gold.
Due to the downturn in tin mining activities, many dredges and other mining equipment have been left unused but under care and maintenance. These equipment worth millions of ringgit could be useful for redeployment in other countries for mining and dredging works. They could well save a lot in new mining capital investment costs.
Recently, the Malaysian government announced that it's encouraging the setting-up of manufacturing facilities for producing machineries and equipment locally as opposed to importing them completely resulting in a drain on the country's foreign exchange. This is an area where mining equipment and machineries can be manufactured locally under licence perhaps on joint-venture basis for the Malaysian and regional markets.
The knowledge and expertise gained by Malaysian industry personnel over the decades of experience in sustaining its mineral resources is not only confined to their technical know-how, but also extends to their knowledge and expertise in policy making, mining management, and environmental preservation and rehabilitation. These invaluable knowledge and experiences could be very useful to other developing countries which are opening their mineral industry. Malaysians could act as mining consultants or advisers to help these nations to formulate appropriate mining policies and regulatory frameworks especially in alluvial mining.
The Government under the current Seventh Malaysia Plan has also emphasised on the need to hasten the prospecting and development of local coal resources to fulfil the increasing requirements for coal for electricity generation and cement manufacturing. The increasing use of coal is in accord with the nation's four-fuel policy. The prospects for investment in coal mining employing state of the art technology in the East Malaysian states of Sabah and Sarawak are very good. The increasing wealth of Malaysians with the country's GDP growth over the last decade consistently at above 8.0 per cent have placed them with the financial capabilities to enter into investments in new frontiers and into higher risks mining ventures with foreign partners for high yield returns.
6.0 Investment Incentives and Promotions
Malaysia offers one of the most liberal sets of incentives for investors and will do more so under the new National Minerals Policy. The government generally welcomes joint venture projects between foreigners and Malaysians and has also encouraged reverse investments in the mining industry overseas.
The Malaysian Constitution safeguards foreign investments from expropriation and guarantees against nationalisation without compensation. Malaysia to date has concluded Investment Guarantee Agreements with at least 30 countries including the US, Germany, Canada, Netherlands, France, Sweden and United Kingdom.
The Malaysian government strongly promotes investments not only in the upstream mining sector but also the downstream minerals based products ector, including non-metallic mineral products such as glass and ceramics. Investments in the downstream non-ferrous metals sector, such as the manufacturing of tinplate, solder and pewterware products are also encouraged.
7.0 Conclusion
In line with the country s VISION 2020 Agenda, namely to make Malaysia a fully industrialized nation by the year 2020, Malaysia's mineral investments in the next millennium will be geared towards ensuring adequate supply of mineral raw materials, both from local and foreign sources, for the domestic manufacturing industry s needs as well as for further value-adding the available mineral resources into valuable end-products. In this context, the Malaysian government has provided encouragements and incentives in welcoming investors into this important economic sector. On the part of Malaysian miners, they certainly are very supportive of the government's initiatives. They stand ready, able and willing to talk and discuss on any possibilities for any form of co-operative ventures and endeavours in the field of mineral commodities investments either in Malaysia or elsewhere.
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