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Lim Saw Mooi & Hew Lee Khean; August 2007

Tin mining is one of the oldest industries in Malaysia which was rapidly developed since 1820s with the arrival of Chinese immigrants. Tin was the major pillars of the Malaysian economy. The most important area is the Kinta Valley, which includes the towns of Ipoh, Gopeng, Kampar and Batu Gajah in the State of Perak. In fact, alluvial tin is mined in a belt of country stretching from Kedah into the Kinta Valley and along the foothills of Perak, Selangor and Johor.

Tin mining industry was once a major contributor to the national economy. In 1979, Malaysia was producing almost 63,000 tonnes, accounting for 31 percent of world output. It was the world's leading producer and employed more than 40,000 people. Malaysia has used several types of mining methods in the tin mining industry. There are dredging, gravel pump, open cast, dulang washing and underground mining. Mining methods in Malaysia hardly changed in terms of popularity. Gravel-pump mining still mines the majority of the tin produce while open-cast mining rose from fourth most used method in 1970 to second in 1994. By 1984, competition from new lower-cost mines in Brazil had already led to a sharp reduction in both Malaysian and Indonesian output, but the world price was sustained until October 1985, when it crashed by 50 percent. The Malaysian industry then shrank rapidly, surpassed in 1988 by Indonesia, which continued to support its mines with large subsidies. Malaysian production, however, has declined further and, for the first time, tin mining rates no mention in the current national plan..

In 1993, the tin industry continued to be the depressing when the country suffered further contraction in tin production, due to the low price of tin, depletion of economic reserves and continuing escalation of overhead costs. In year 1993, the average price level for tin stood at RM13.09 per kg which is still far below-even costs of most Malaysian tin mines, even after the implementation of drastic cost cutting measures and increased operating efficiency. The number of mines has also declined sharply from 852 units in 1980 to 43 units as at the end of 1993 and expected to reduce further in 1994. In the same year, domestic production of tin also dropped dramatically. Total tin metal exports, which included export of local tin and re-export of foreign tin, also dropped and the total export value of tin metal in 1993, amounted to RM 488.9 million. The Industrial Master Plan (IMP), launched by the Government in 1986, the Tin Industry (R&D) Board has been entrusted to promote the development of the downstream tin-based manufacturing industry in Malaysia. In this context, the Malaysian Tin Products Manufacturers' Association (MTPMA) was set up in early 1989 to promote and protect the interests of the downstream tin-based manufacturing sector in Malaysia. Domestic consumption of locally refined tin metal increased from 4,569 tonnes in 1992 to 5,196 tonnes in 1993. Despite some progress made in the local downstream tin-based manufacturing industry as reflected by the modest growth in the domestic tin metal consumption, the industry is at present still relatively small in terms of its contribution to the nation's manufacturing value-added activities. However, potential for the advancement of the industry is considerable, especially in the field of tin chemicals.

In the early 1980s, the price of tin began a long downward slide. Consumers were tempted to substitute for tin thus Malaysia tin production started to decline. The downfall of the tin industry is not just a result of the price drop, but also due to the escalating costs of energy, skilled manpower, environmental constraints and land availability in comparison with other industries, which may get a higher priority for development over mining. Examples include the construction, electronics, manufacturing, information technology and agriculture.

Tin production started to decline in 1988 which is 4.9 percent decline of the output. However, the tin output grew about 3.8 percent to 32,034 tonnes in 1989. Malaysia is still the world's largest producer of tin, but output is unlikely to ever regain the 1980's level of 61,404 tonnes annually. In cooperation with other tin producers, Malaysia agreed to limit its exports as part of a program to assist the market's recovery from the 1985 collapse of the International Tin Council. Higher tin prices and falling stocks may bring an early end to the restrictions. However, as tin is a non-renewable resources, the importance of this industry is being replaced.

Main | Malaysian Economy | Asian Crisis | Teaching Subjects  

Har Wai Mun @ 2007