Malaysian Economy

Bachelor of Business Administration (BBA)

Professor Dr. Ahmad Bin Othman

School of Business and ManagementUniversity College of Technology Sarawak (UCTS)

96000 Sibu, Sarawak

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Today’s Agenda (Week #3)

Extractive industries

The tin industry in Malaysia

Petroleum

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What is What is Extractive

Industry?

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What is Extractive Industry?

Any processes that involve the extraction of raw

materials from the earth to be used by consumers. The

extractive industry consists of any operations that

remove metals and mineral from the earth. Examples of

extractive processes include oil and gas extraction, mining,

dredging and quarrying.

Our focus of discussion will be on TIN and PETROLEUM

History of History of Tin

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Tin has been in use since ancient ages and its role has played an important role in the history of the human race.

Around 5000 years ago, human first began mining and incorporating tin with copper to create bronze thus marking the beginning of the Bronze Age.

The Bronze Age is now a recognised stage in the development of civilisation.

How bronze was discovered we do not know, but the peoples of Egypt, Mesopotamia, and the Indus valley started using it around 3000 BC.

General discussions

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Tin artefacts have been found in an Egyptian tomb of the eighteenth dynasty which dates around to 1580-1350 BC and it was traded around the Mediterranean by the Phoenicians who obtained it from Spain, Brittany and Cornwall.

In the 19th century, Cornwall was the major producer of the metal, but then deposits were found in Bolivia and East Asia, and today China is the leading producer, followed by Indonesia and Peru.

General discussions

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The Chinese were mining tin around 700 BC in the province of Yunnan.

Pure tin has also been found at Machu Picchu, the mountain citadel of the Incas.

When copper was alloyed with around 5 per cent of tin it produced bronze, which not only melted at a lower temperature, so making it easier to work, but produced a metal that was much harder, and ideal for tools and weapons.

General discussions

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Nowadays, we cannot imagine anything without this

metal, TIN.

Right from cold drink cans to roofs, almost everything

has tin.

It is found in both as an alloy and also in pure form to

make up thousands of daily items that we take for

granted.

General discussions

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Tin was originally known as plumbum candidum or

white lead in Latin.

Tin is actually a soft white metal which has an

unusually low melting point of 231.85 degrees Celsius.

Its chemical symbol is Sn, and comes from its more

recent Latin name, stannum. The English name, tin,

finds its origin from a Germanic root.

General discussions

Fact about Tin

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Group 14  Melting point231.93 oC, 449.474 oF, 505.08 K 

Period 5  Boiling point 2586 oC, 4686.8 oF, 2859.15 K 

Block p  Density (kg m-3) 7285 

Atomic number 50  Relative atomic mass 118.71  

State at room temperature

Solid  Key isotopes 120Sn 

Electron configuration[Kr] 4d105s25p2 

CAS number 7440-31-5 

http://youtu.be/NAZDN_WGckg

History ofHistory of Tin in Malaysia

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Tin mining is one of the oldest industries in Malaya.

The tin mining started since 1820s in Malaya after the arrival of Chinese immigrants.

The Chinese immigrants settled in Perak and started tin mines. Their leader was the famous Chung Ah Qwee.

Their arrival contributed to the needed labour and hence the growth of the tin mining industry.

By 1872, there were about 40,000 miners in Malaya, mostly Cantonese and Hakka.

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In Selangor, tin mining started in 1824. There were about 10,000 Chinese in the state. The majority of them were Hakka. Kuala Lumpur, like Selangor was similarly developed by the hardworking miners.

… In 1857, this is where it all began. A group of 87 miners, all of them Chinese, poled their way up the Klang in search of tin.

At that time, tin was in huge demand, especially by America and the British Empire, which needed the durable, lightweight metal to help fuel their industrial revolutions.

In Ampang, few miles to the east, there were huge reserves of tin, and this spot was the highest point.

They named it "muddy confluence," built a ramshackle, thatched-roof village, and within a month all but 17 of them had died of malaria. It was a devastating beginning to what would become one of Asia's richest cities. 

Tin in Malaysia

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Later, more tin prospectors, followed, and within a few years the village thrived. Like all mining boom-towns, it was raucous place, populated almost exclusively by men.

They spent their days in gruelling labor, crouching over tin pans or digging the earth, returning to the town at dusk to console their loneliness in bars, gambling halls, and brothels.

Few got rich, but throughout the peninsula the mania for tin inspired fierce rivalries and claim disputes.

The Chinese miners organized themselves into clans and warring factions called "secret societies." Without a centralized Chinese authority keeping peace, order in the mining areas was nearly impossible.

Tin in Malaysia

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Whole clans could be swept up in fights that started over little more than a drunken dispute between two men.

In 1868, needing a solution to the chaos, the headmen of the local clans elected a man named Yap ah Loy as "Kapitan China," or leader of the Chinese community.

With the support of the local sultan, he built prisons and quelched revolts, quickly establishing an infamous reign over the entire Kuala Lumpur mining area.

Tin in Malaysia

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Yap Ah Loy

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Tin Mining Activities

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The expansion of tin mining began in the 1870s, with the commencement of pit-working of tin laden sands in valleys all the way down the West Coast region of the Peninsular.

Growing industrial demand for tin, and the discovery of large and rich tin deposits in Larut and Kinta in the state of Perak in the early 19th century led to the disputes among the Malay rulers.

Large scale immigration of Chinese labour which in turn gave rise to Chinese investment, British intervention and domination and finally, injection of foreign, mainly British capital and technology into the Peninsular.

Tin in Malaysia

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YearDredg

e%

Gravel 

Pump%

Open Cast

%

Under- 

ground

%

Dulang 

Washing

%Other

s% Total

1970 1975 1980 1989 1990 1991 1992 1993 1994

23,931 

20,329 

18,222 

11,963 

10,267 

9,515 6,072 3,522 1,355

32.4 31.6 29.7 37.3 36.1 45.9 42.3 33.9 21.0

40,739 

35,183 

34,484 

13,263 

12,216 

6,476 3,886 3,426 2,438

55.2 54.7 56.2 41.4 42.9 31.3 27.1 33.0 37.8

2,504 2,535 2,705 2,905 2,173 1,754 1,592 1,653 1,375

3.4 3.9 4.4 9.1 7.6 8.5 

11.1 15.9 21.3

2,254 1,894 1,085 103 102 71 71 48 72

3.1 2.9 1.8 0.3 0.4 0.3 0.5 0.5 1.1

2,828 3,081 3,246 2,835 2,601 2,065 1,640 1,059 721

3.8 4.8 5.3 8.8 9.1 

10.0 11.4 10.2 11.2

1,539 1,342 1,662 965 

1,109 829 

1,078 676 497

2.1 2.1 2.7 3.0 3.9 4.0 7.5 6.5 7.7

73,795 

64,364 

61,404 

32,034 

28,468 

20,710 

14,339 

10,384 

6,458

Tin Mining Activities

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1970 1975 1980 1989 1990 1991 1992 1993 1994

73,795 64,364 61,404 32,034 28,468 20,710 14,339 10,384 6,458 

 

13,726 18,476 8,422 23,857 21,732 30,536 33,264 27,277 35,574

92,631 77,940 69,498 49,480 52,703 42,425 45,149 35,545 35,327

10.99 15.94 35.72 23.09 16.45 15.05 15.25 13.09 14.14

1,083 910 852 255 141 92 63 43 39

49,453 39,736 39,009 12,695 8,508 6,594 4,672 2,296 2,006

Year Production Import Export AveragePrice

No. ofMines

Employment

Tin as Commodity

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Year Production of tin (‘000 tons/tonnes)

Countries 1861-1900

1931 1929 1950 1965 1980 1990 2001 2008

Malaysia 8.5 51.4 72.3 57.5 63.7 61.4 28.5 5.0 3.4

Thailand - 6.7 9.9 10.4 19.0 33.7 14.4 2.5 0.2

Indonesia 6.0 20.9 35.9 32.1 14.7 32.5 31.1 56.3 96.0

Bolivia 0.1 25.9 46.3 31.2 23.0 27.3 17.2 12.0 16.0

Brazil - - - 0.2 1.8 6.9 39.1 13.0 9.6

China 0.5 8.3 6.8 7.5 25.0 16.0 44.0 99.4 121.2

United Kingdom 9.4 5.3 3.3 0.9 1.3 3.3 4.2 - -

Nigeria - 4.0 11.1 8.3 9.5 2.7 0.2 1.3 2.4

Zaire - - 1.0 13.5 6.3 3.2 1.6 - 9.0

Australia 0.1 7.8 2.2 1.8 3.8 11.6 7.4 9.6 1.8

South Africa - 2.3 1.2 0.6 1.7 2.9 1.1 - -

USSR/Russia - - - 8.9 23.0 16.0 15.0 5.5 1.1

World 25.0 134.0 196.0 169.3 201.1 235.9 220.6 249.3 310.2Source: Rajah Rasiah (ed.) (2011)

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Tin price

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Tin is an important commodity in international trade, but it does not naturally as a metal.

Tin is used in hundreds of industrial processes throughout the world. Tin is widely used in many industries such as in food packaging, culinary equipment, electronics, tin chemicals, plumbing solders, engineering alloys, pewter and bronze in music and the arts, dental amalgams, anti-corrosion and engineering coatings, wine capsules and fire retardants.

Uses of tin

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Tin is mostly commonly used in alloys, and in tin plate which is a thin sheet of steel with a protective coating of tin.

Tin plate is used for food cans because it is not reactive to the acids present in food.

Alloys of tin include bronze (combination of tin and copper), pewter (combination of tin and lead), superconducting wire (combination of tin and niobium), Babbitt metal (combination of tin, copper and antimony), bell metal (combination of tin and copper and solder which is a combination of tin and lead). Babbitt metal is used for the surface of bearings. Superconducting wires are used in the manufacture of extremely powerful magnets.

Uses of tin

History of History of Petroleum

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Oil,

and nergy

The Miri oilfield in Sarawak – started production in 1910, Developed by Shell

Petroleum production began offshore from east coast of peninsular Malaysia in mid-1970s

By 1980, petroleum generated 24% of Malaysia’s exports.

By 1990s, 58% of Malaysia’s petroleum output came from Peninsular Malaysia, 28% from Sarawak, 14% from Sabah.

In 2000, petroleum contributed 25% of Malaysia’s revenue.

General discussions

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Petronas was Incorporated on 17 August 1974 under the Companies Act 1965

Ownership: 100% owned by the Malaysian government

Address: Petroliam Nasional BerhadTower 1, KLCC50088 Kuala Lumpur, MalaysiaTel: 603-20515000

Today it is found in the Fortune Global 500 largest corporations.

And has fully-owned subsidiaries which are listed on the Kuala Lumpur Stock Exchange. It has business interest in 35 foreign countries.

About Petronas

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Important Achievements1975 First export of crude oil1976 Conclusion of production sharing contract with Shell and Esso1978 Incorporation of Carigali, the exploration arm.1980 Incorporation of Asean Bintulu Fertilizer - marking its entry into petrochemicals1981 Its first gas station set up in Taman Tun Dr Ismail, Kuala Lumpur1982 Carigali's first oil discovery in the Dulang oilfield, offshore Terengganu1983 Malaysian LNG exported its first shipment of liquified natural gas to JapanFirst refinery with 30,000 bpd capacity in Kertih, Terengganu came onstream1984 HQ move to Kompleks Dayabumi1985 First fertilizer export. First liquified export.1990 First overseas operation - Myanmar1994 Petronas Dagangan Bhd - first subsidiary listed on KLSE1997 HQ moved from Dayabumi Comples to the Twin Towers

About Petronas

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Sustaining oil and gas production

This involves extending the lifecycle of existing resources by optimising

exploration, development and production activities. Three EPPs have

been identified:

•EPP 1: Rejuvenating existing fields through enhanced oil recovery;

•EPP 2: Developing small fields through innovative solutions; and

•EPP 3: Intensifying exploration activities.

*EPP – Entry Point Project

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Enhancing downstream growth

This thrust aims at tapping two sources of growth in the

downstream sub-sector to take advantage of growth

opportunities and improve the supply of oil and gas to end users:

•EPP 4: Building a regional oil storage and trading hub; and

•EPP 5: Unlocking premium gas demand in Peninsular

Malaysia.

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Making Malaysia the number one Asian hub for oil field services

This thrust aims at positioning Malaysia as an OFSE hub for Asia,

leveraging the nation’s strategic location at the centre of the Asia

Pacific region and adjacent to international shipping lanes. Three EPPs

have been identified:

•EPP 6: Attracting MNCs to bring a sizeable share of their global operations to Malaysia; •EPP 7: Consolidating domestic fabricators; and

•EPP 8: Developing engineering, procurement and installation

capabilities and capacity through strategic partnerships and joint

ventures.

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Building a sustainable energy platform for growth

This thrust includes initiatives that aim at ensuring energy security for

Malaysia as the nation strives for growth towards becoming a high-income

economy. This also involves reducing reliance on fossil fuels while growing

our power generation capacity. Four EPPs have been identified to improve

Malaysia’s energy security and efficiency:

•EPP 9: Improving energy efficiency;

•EPP 10: Building up solar power capacity;

•EPP 11: Deploying nuclear energy for power generation; and

•EPP 12: Tapping Malaysia’s hydroelectricity potential.

Thank

You

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