MALAYSIAN TIN BULLETIN

JANUARY 2011

January Tin Market Review

Kuala Lumpur Tin Market (KLTM)
Tin trading on the Kuala Lumpur Tin Market (KLTM) opened the New Year at US$26,800 per tonne, a significant rebound over the 2010 closing price of US$26,515 per tonne. On the third day of the first trading week, however, the tin price retreated to US$26,500 per tonne which was also the lowest price of the month, and stayed unchanged at that level for the rest of the week. The second trading week saw tin prices moved upwards to end the week firmer at US$26,900 per tonne following strong buying interest, and in line with the uptrend in base metals trading on the London Metal Exchange (LME). During the third trading week, tin prices eased somewhat before ending the week lower at US$26,720 per tonne. The local tin market was closed the day before due to the Thaipusam holiday. The final trading week saw tin prices surging strongly ahead, surpassing the US$30,000 per tonne psychological level, and in the process recording Januarys peak price of US$30,050 per tonne on the final day of the month. Tin prices were bullish during the week in what dealers described as a period of strong demand supported by a wave of buying spree. Despite the buoyant final trading week, overall trading volume on the KLTM for the month of January softened slightly to 1,036 tonnes from 1,111 tonnes recorded in the preceding month. Januarys average trading volume was 52 tonnes, a tonne lower than the Decembers average. The highest daily trading volume for the month was 100 tonnes on 24 January 2011 and the lowest was 30 tonnes on 5 January 2011. Januarys monthly average price was US$27,304 per tonne, which was much higher than the December average of US$25,909 per tonne. Trading on the KLTM in January was conducted within a broad price band of US$26,500 and US$30,050 per tonne. There were 20 days of trading on the local physical tin market during the month.

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LME and New York Market

Tin prices on the London Metal Exchange (LME) during the month of January were mostly on an upward momentum with the market particularly bullish during the final trading week. Traders attributed the month to strong demand and hectic buying. Tin trading on the LME started the month on a fairly strong note with opening prices of US$27,200 and US$27,025 per tonne for cash and three-month tin as compared to the December closing prices of US$26,945 and US$26,920 per tonne, respectively. Prices, however, eased somewhat thereafter to record the months lowest at US$26,095 per tonne for cash tin and US$26,100 per tonne for three-month tin on 5 January 2011. Tin prices rebounded during the second trading week to almost reached the US$27,000 per tonne level before ending the week slightly lower on technical correction. The upward momentum was attributed to good buying demand. The following trading week saw tin prices rose further to breach that US$27,000 per tonne level. During the final trading week, tin prices were bullish surging all the way up towards month end to record Januarys peak of US$30,100 and US$30,050 per tonne for cash and three-month tin, respectively. Tin was traded on the LME during the January month within a wide price range of US$26,095 to US$30,100 per tonne for cash tin. For three-month tin, the trading range was between US$26,100 and US$30,050 per tonne. The average LME cash and three-month tin prices for the month were US$27,465 and US$27,406 per tonne, respectively. Tin trading on the New York market in January followed a similar trading pattern as on the LME. The average New York spot tin price for January was higher at US$28,036 per tonne compared to the previous month of US$26,830 per tonne. The highest and lowest prices recorded for the month were US$30,468 and US$27,051 per tonnes, respectively.

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EDITORIAL NOTE
In the November 2010 issue of the Malaysian Tin Bulletin, we published a news article entitled Tin Mining Sector in the Spotlight from The Star, which contained a factual error. It was reported in the article that Rahman Hydraulic Tin Sdn Bhd (RHT) was awarded a 30-year mining concession for prospecting of tin ore and other minerals over a 14,000ha land in Pengkalan Hulu, Perak last year. The management of RHT has informed that this statement is incorrect. As a matter of fact, RHT has not been awarded the said concession. On a related matter, industry members have raised concern over the misuse or misconstrue of certain mining terminologies such as mining lease, prospecting or exploration licence and proprietary mining licence, in particular when used by some reporters and journalists in their media coverage pertaining to the mineral resource industry. To help overcome such misconception and to prevent misuse, we publish below their interpretation as provided in the various State Mineral Enactments. "mining lease" is a permit granted by the State Authority over a set period of time that entitles the holder the right to enter upon an area of land to mine for mineral resources and to extract them from the ground. Mining lease may be granted over State land, including State land beneath alienated land. proprietary mining licence is a permit granted by the State Authority over a set period of time that entitles the holder the right to mine for mineral resources on alienated land. prospecting or exploration licence is a permit granted by the State Authority over a set period of time that entitles the holder the right to enter upon an area of land for the purpose of identifying one or more mineral deposits or occurrences and evaluating the feasibility of mining those deposits or concurrences.

Should there be any inconveniences caused to our readerships resulting from such reporting errors as afore-mentioned, we extend our humble apologies.

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News Highlights
Tin Miners Rush for Licences
A tin rush has started in Perak, with former miners clamouring for licences and the state government looking for new grounds to revive the once ailing sector. Mentri Besar Datuk Seri Dr Zambry Abd Kadir said the state government has approved the application of several companies to start their tin mining operations again. Many companies had applied to mine tin after prices soared to an all-time high of US$26,900 (RM94,150) per tonne in October last year, he said. Tin prices fell many years ago and many operators were forced to close shop. Now that the price has gone up, they are applying for licences, he told reporters after receiving new Perak police chief Deputy Comm Datuk Mohd Shukri Dahlan at the Mentri Besars office here yesterday. Dr. Zambry said many former mining companies had applied for licences and the state government has given approval to several to revive their operations. Dr. Zambry added, however, the tin mining sector was no longer as lucrative as it used to be. Malaysia is contributing only 2% of the global tin production, he said. It is getting smaller and smaller but we have an opportunity and we also have the expertise in reviving the sector, he added. Dr. Zambry said the Perak government had begun its search for new tin mining areas in its bid to revive the sector. We have identified several potential areas outside the Kinta Valley. The relevant departments are conducting environmental impact assessment at the sites, he said. He, however, declined to name the sites. We want to grab every opportunity available but we also do not want to sacrifice the environment, Zambry said, adding that there were no new sites within the Kinta Valley, which once had the richest tin deposits in the world. An International Tin Research Institute survey in 2006 found that half of the worlds tin produced was used in solder. The rest was for tin plating, tin chemicals, brass and bronze, and other uses. (Source: The Star, 5 January 2011)

Ho Wah Delves into Tin Mining

Ho Wah Genting Bhd plans to start its tin ore mining operations in Perak immediately after the Chinese New Year, said its chief executive officer and managing director William Teo Tiew. We plan to start operations sometime in February and we expect earnings from the mining operations to be realised in the current financial year, Teo told Business Times in an interview at his office in Kuala Lumpur last Friday. Potential earnings from the mining operations should bode well for Ho Wah, which is on track to post its highest profit in nine years. For nine months ended September 30 2010, Ho Wah registered a net profit of RM6.86 million, almost matching its 2001 net profit of RM6.91 million. We should easily surpass that figure in 2010, but I am unable to provide you any guidance figures, said Teo. All of Ho Wahs revenue came from the groups wire and cable business, but for this year, Teo said that its tin ore mining will be a major earnings driver. We expect the tin ore mining business to be the major contributor to our earnings, he said. In 2009, Ho Wah posted a 12-month revenue of RM144.04 million, while up to the nine months of 2010, its revenue stood at RM186.05 million. Ho Wahs tin mining operations are headed by HWG Tin Mining Sdn Bhd. The company has a concession from the Perak state government to extract tin until 2018 at a 202.4ha site in Pengkalan Hulu in Grik. According to Teo, Ho Wah targets to extract some 2,000 tonnes of tin ore a year. On the average, it is about 150 tonnes a month, he said, adding that the tin ore

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will be sold to Malaysia Smelting Corp Bhd. On the cost, Teo estimates that it will cost around US$7,000 (RM21,400) to extract one tonne of tin ore. Tin prices are trading in range of US$26,000 (RM79,560) a tonne now, and we are in this business now because mining has once again become a profitable venture, he added. (Source: New Straits Times, 17 January 2011)

MSC Expects SGX Listing Soon

Malaysia Smelting Corporation Bhd (MSC), the worlds third-largest integrated tin producer, expects its proposed secondary listing on the Singapore Exchange (SGX) main board to take place before the end of this month, said group chief executive officer Dato Seri Dr Mohd Ajib Anuar. This will make MSC dual-listed on both Bursa Malaysia and SGX. Ajib said MSC late last year received the letter of eligibility-to-list from SGX for the listing of the entire enlarged issued capital of MSC. We have also submitted the preliminary prospectus to the Monetary Authority of Singapore, he told StarBiz yesterday. In fact, we expect the registration and issuance of the final prospectus and launching of our initial public offering (IPO) in Singapore in the third or fourth week of January and the listing of the public offer shares on the SGX before the months end. Ajib said the size of the IPO was between 12.5 million and 25 million new MSC shares, with an expected gross proceeds of RM100 million. The board of MSC is expected to announce the actual price and number of shares to be issued in the third or fourth week of this month, he added. MSC is a 73%-owned subsidiary of The Straits Trading Co Ltd, which in turn is listed on SGX. On the proceeds from the IPO, Ajib said about 80% was expected to be used for expansion of MSCs existing smelting and mining operations as well as acquisition and development of new mines and mining projects in Malaysia and Indonesia. At this stage, the MSC board still has yet to identify any specific new mines to be acquired and announcements will be made should there be any. The balance is for working capital and expenses for the dual listing, he said. Ajib said by having dual-listing status, MSC shares would become more attractive to foreign investors and MSC would have access to capital markets in Singapore. The dual listing will also increase the public float of MSC shares, which is less than 25% currently, to about 40% after the dual listing, thus potentially improving the liquidity in the trading of MSC shares. This will also help stimulate investors interest in MSC from within and outside Malaysia, he added. Late last year, MSC was seen actively completing the disposals of its non-tin investments and assets abroad which include its gold business in Australia, nickel in Vietnam, coal in Indonesia as well as copper and zinc operations in the Philippines. After pursuing the diversification in 2007 and 2008, Ajib said the group decided to reposition MSC back into its core of tin mining and smelting operations. The group has since ceased from pursuing other metals and minerals, except for tin. Meanwhile, in an interview with Bloomberg in Singapore, Ajib said tin, the best performer last year of the six principal base metals traded in London, might rally to a record US$40,000 per tonne as global supply might lag behind demand until at least 2013. You still have upside, he said. A price of US$35,000 to US$40,000 in the next five years is not impossible as demand climbed, new mines took longer than expected to start output, and ore quality dropped, Ajib said. Tin, used in electronics and packaging, was the first base metal to reach a record last year after the worst global recession since World War II. The metal rose 59% in 2010, touching US$27,500 per tonne on November 9, on supply disruptions in Indonesia, China and Africa and increased demand, Barclays Capital has forecast a global shortage of 17,000 tonnes this year. In real terms, the peak was over US$40,000 and today its US$26,000, Ajib said, referring to the price in 1980 adjusted for inflation. According to the US Geological Survey, tin averaged US$8.46 a pound that year, equivalent to about US$22.39 a pound last year when adjusted to reflect the change in the value of money.

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(Source: The Star, 18 January 2011)

MSC may raise RM104m from Singapore Listing

Malaysia Smelting Corporation Bhd (MSC) Bhd, the worlds third largest supplier of tin metal, could raise as much as RM104 million, or nearly a third of its current market capitalisation of RM345 million, from a dual listing in Singapore. MSC said yesterday the issue price for its secondary listing in Singapore had been set at S$1.75 or equivalent to RM4.17 a share, a discount to its last traded price of RM4.60. Fund manager Tan Teng Boo of Icapital Biz Bhd said the dual listing is good for MSC in the long term despite the price discount. Icapital owns 1.9 million MSC shares as at end-June 2010. It purchased the shares for RM6.29 million, or RM3.01 a share. We have no immediate intentions of selling the shares, as we are long-term investors and commodities are a good place to be in right now, Tan told Business Times in a telephone interview. The listing in the island-state will include an issue of one million new shares to the Singaporean public and a placement of 24 million new shares to investors, including institutional buyers, MSC said in a statement to the stock exchange. CIMB Bank Singapore is the lead manager for the public issue, while CIMB Securities Singapore is the underwriter and placement agent for the whole exercise, it added. Prior to the statement, MSC had sought a one-day trading suspension from the stock exchange. The listing in Singapore will position MSC as the sole Malaysian company in the country, which has a dual listing, after Tanjong plc was taken private by tycoon Tatparanandam Ananda Krishnan last year. There are, however, overseas listings of associate or subsidiary companies of those listed on the local stock exchange, such as Samling Global Ltd, which is listed in Hong Kong, while its subsidiary Lingui Developments Bhd and Glenealy Plantations (Malaya) Bhd are listed on Bursa Malaysia. MSC, the countrys sole tin smelter, is 73 per cent-owned by the Straits Trading Co Ltd, one of the oldest publicly-listed companies in Singapore. The initial public offering in Singapore should also help create liquidity in MSC shares here, as currently MSCs public shareholding on Bursa Malaysia is 25.8 per cent. As such the dual listing exercise could help increase MSCs free-float in the market to about 40 per cent. Investment bankers said the MSC dual listing is a way to garner more interest in its shares among Singaporebased fund managers, who may not want to be exposed to currency risk when buying shares here, and that generally, stocks listed in the Singapore stock exchange have higher liquidity than their peers here. The listing in Singapore comes at a time when tin ore mining, often dubbed a sunset venture despite contributing some RM2 billion annually to the countrys gross domestic product, is trading close to US$27,000 a tonne, its highest level in this century. (Source: New Straits Times, 22 January 2011)

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Tin Price at All-Time High

The price of tin on the Kuala Lumpur Tin Market (KLTM) soared to close at an all-time high of US$27,500 per tonne yesterday on concerns over tight supplies amid continued strong demand, especially from Europe, Japan, China and India. The tin price on the KLTM is closely tracking the movement and trading patterns of tin on the London Metal Exchange (LME), said Malaysian Chamber of Mines (MCOM) executive director Muhamad Nor Muhamad. Even when MCOM officials visited the LME last October, traders and dealers there were so bullish on tin prices and demand for the commodity for this year, he told Starbiz. He noted that demand from China and India for minerals was still intact, adding that the surge in the price of tin was a good sign for the commodity this year. Muhamad Nor expects tin to be strongly traded at current levels for the rest of the year. A dealer said there was a shortage of tin currently as production from major producer in Indonesia was slowing down due to the monsoon seasons. I expect this shortage situation to continue for quite some time but it is still hard to grasp the extent (of the price rise). Meanwhile, a Bernama report quoted dealers as saying that demand from Europe had shot up recently due to the severe winter situation and this eventually drove up the price of tin on the LME. Last Friday, tin price on the LME rose US$745 to US$27,745 a tonne. Turnover on the KLTM rose to 100 tonnes from 50 tonnes last Friday, with the participation of Japanese, European and local traders. The price difference between the KLTM and LME has widened to US$175 a tonne against US$140 a tonne previously. (Source: The Star, 25 January 2011)

Record Tin Prices Bring Shine to Local Metal Firms

Shares of tin mining firms rallied on record tin prices and the prospects of Malaysia Smelting Corporation Bhds (MSC) Singapore public offering. The price of tin on the Kuala Lumpur Tin Market (KLTM) jumped to a record of US$27,720 per tonne yesterday on concerns over tight supplies and strong demand from Europe, Japan, China and India. This is the second time in as many days the metal hit fresh highs. On Monday, tin prices closed at US$27,500 per tonne for its highest close this century. Tin is enjoying a rally and as with other commodity prices, it will continue to climb for at least six months, said Jupiter Securities head of research Pong Teng Siew. Yesterday, MSC gained 4 sen to RM4.88 a share, while Majuperak Holdings Bhd was up 1 sen to 55 sen. Ho Wah Genting Bhd, after hitting an intra-day high of 60.5 sen a share, closed 3 sen lower at 53 sen a share. Pong said in the immediate term, tin ore-related companies such as MSC and Ho Wah should benefit from the strong global demand for tin. MSC is the worlds third largest producer of tin metal, while Ho Wah plans to start tin mining operations in Perak next month. Once a cornerstone of the Malaysian economy, tin has seen its fortune dip in recent years, with the sector being dubbed a sunset industry. Nevertheless, with the recent bullish global demand for the metal, and MSCs planned listing in Singapore making it the only Malaysian public-listed company with a dual listing, its fortune seems to have taken a turn for the better.

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I think the MSC listing in Singapore will receive a good response and if that happens, it will spill over to Malaysia, said Pong. Tin stocks have been outperforming the key benchmark index on strong buying momentum. This year alone, MSC gained some 11 per cent to RM4.88. Ho Wah Genting Bhd rose 45.2 per cent to 53 sen, while Majuperak increased 28 per cent to 55 sen. During the same period, the 30-strong blue-chip index has lost 0.46 per cent. Lee Cheng Hooi, head of retail research at Maybank Investment Bank Bhd, said that there is a fleeting interest in mining stocks now. Unlike MSC, which trades above RM4, both Ho Wah and Majuperak shares are priced below RM1, thereby regarded as penny stocks. Most retail players are often major buyers of penny stocks. Meanwhile, Edmund Tham, Mercury Securities head of research, said interest in tin miners shares here is dependent on international price of the metal. As long as metal prices go up, there will be interest here for tin miners shares, said Tham. (Source: New Straits Times, 26 January 2011)

MSC Makes Positive Start on Singapore Bourse

Shares of Malaysia Smelting Corporation Bhd (MSC), which made its debut in a secondary listing on the Singapore Stock Exchanges main board yesterday, closed up three cents at S$1.78 from the offer price of S$1.75 while its Kuala Lumpur-listed shares closed 21 sen lower at RM4.60. This was the first secondary listing of a Malaysian stock on the Singapore Stock Exchange. The Singapore-listed shares opened with a three-cent premium at S$1.78 yesterday and ended the morning session at S$1.80, featuring among the top 20 gainers at midday while the Kuala Lumpur-listed shares were down 18 sen to RM4.63 at midday. MSC, majority-owned by Singapore-listed Straits Trading Co Ltd, raised S$40.1mil in the secondary offering last week via the sale of 25 million shares. Analysts said the positive debut for the stock was likely due to the bullish outlook for commodity prices since MSC was the worlds third largest integrated tin producer. The price of tin, used for soldering and packaging, had risen to record levels in recent days on the London Metal Exchange due to shortfalls of the metal since last year. A senior analyst attached to a foreign brokerage told Starbiz that first day euphoria could account for the Singapore-listed shares doing better than the Kuala Lumpur-listed shares. Sometimes the appeal of a more international market may also account for the premium as theres more exposure, he said, explaining the divergence in the share price of both stocks. MSC chief executive officer Dato Seri Dr Mohd Ajib Anuar said recently that about 80% of the proceeds were expected to be used for expansion of MSCs existing smelting and mining operations as well as acquisition and development of new mines and mining projects in Malaysia and Indonesia. MSC, which had diversified into non-tin investments in 2007 and 2008, completed disposal of these assets and investments late last year, including the gold business in Australia, nickel business in Vietnam, coal business in Indonesia as well as copper and zinc operations in the Philippines. (Source: The Star, 28 January 2011)

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Rekindled Interest in Tin

It has been a major struggle for tin to regain its ground after experiencing a sharp fall in prices in mid-1980s which was intensified by the collapse of the International Tin Agreement due to the International Tin Council debt crisis. After more than two decades, tin is making a strong comeback in terms of pricing as well as in the new applications especially with the growing leadfree awareness campaign among world food packaging companies. The commodity is also experiencing a tight supply situation given the availability of very few new tin mines globally. As of October last year, the world commercial refined tin stockpile has dropped to 32,266 tonnes form 47,561 tonnes in 2009. Major price catalyst for tin this year is expected to come from continued strong demand from the automotive and construction sectors in China and India. At current record price of US$29,200 per tonne compared with US$4,338 to US$4,483 per tonne in 2001, tin has captured the interest of many Malaysians and foreign mining companies. Malaysian Chamber of Mines executive director Muhamad Nor Muhamad tells StarBizWeek there will be major changes in the domestic tin industry this year as the Perak state government has issued exploration licences, prospecting permits, tin mining leases and renewals. This is a positive move and we hope other mineral-rich states like Selangor, Pahang as well as Sabah and Sarawak will undertake similar moves. While the famous Kinta Valley in Perak may no longer have plenty of tin deposits left, new areas are being explored like Pengkalan Ulu in Grik for the mineral. Ho Wah Genting Bhd, via its subsidiary HWG Mining Sdn Bhd, is expected to commence its tin ore mining in Pengkalan Ulu after the Chinese New Year next month, says Muhamad. The company is expected to produce some 2,000 tonnes of tin ore a year. However, MSC-owned Rahman Hydraulic Tin Sdn Bhd which secured its tin mining concession in Grik from the Perak state government in 2007 for 10 years, will still be the largest tin producer in the country with a capacity of over 2,000 tonnes annually two thirds of the countrys production. It would be good if the Selangor state were to consider reopening tin mining areas in Dengkil and Batang Berjuntai, Muhamad says. The major users of tin include those in solder, tinplate and pewter sectors. According to the Department of Minerals and Geoscience, Malaysia has 31 tin mines in operation producing a total of 2,410 tonnes as at end2009. Apart from tin mining, Muhamad Nor says that there are plenty of mining opportunities in Pahang, Malacca and Negri Sembilan which have pockets of iron ore deposits. While Sabah and Sarawak may not have tin deposits, the states are believed to be rich in copper, gold and coal. Ho Wah Genting managing director William Teo says he is aiming for a compounded annual growth of 20% from the companys tin ore mining division for the next three years. Its subsidiary HWG Tin Mining was awarded with a 10-year mining lease in 2008 to mine tin and other minerals on 202ha. According to Teo, the groups revenue, which is mainly from its wire and cable business, will soon be derived from tin ore mining in financial year ending December 31, 2011. The company expects a higher profit margin from tin ore mining as the cost to extract one tonne of tin ore was about US$7,000 compared with the current tin price of about US$29,000 a tonne.

(Source: The Star, 29 January 2011)

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Commodities Rising
Major structural changes in the dynamics of the global commodities scene have propelled world commodities to staggering record prices. Crude oil, gold, coal, iron ore, copper, soybean and wheat closed on a firm note last year registering price increases of between 30% and 50% but tin and rubber are charting new highs week after week. As of yesterday, crude oil had risen 16% to US$85, gold 20% (US$1,310), copper 37% (US$9,440), soybean 48% (US$1,390) and 45% wheat (US$839). Tin is also making a strong comeback given the consistently high tin price which is trading at record price of US$29,200 per tonne. Malaysian Chamber of Mines president Dato Seri Dr Mohd Ajib Anuar predicts that tin price may hit US$40,00 per tonne in the next five years. The Perak state government had enacted the Mineral Act to protect explorers and miners given the capital intensive nature of the mining business. Ajib says a revival in the mining sector should materialise if the primary mineral deposits belt on the east coast of Peninsular Malaysia is discovered by experts. A confirmed discovery of tin, gold, copper and other minerals could lead to a significant transformation in the local mining sector, adds Ajib. He says mining should be undertaken on a large scale. Unlike mining for secondary tin deposits, prospecting and discovery of primary tin deposits are capital intensive ventures that could in turn attract major foreign investors. (Source: The Star, 29 January 2011)

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Tin Statistics

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