Malaysian Economy

Bachelor of Business Administration (BBA)

Professor Dr. Ahmad Bin Othman

School of Business and Management

University 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 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 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 point 231.93 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 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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Year Dredge %Gravel

Pump%

Open

Cast%

Under-

ground

%

Dulang

Washin

g

% Others % 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 Average

Price

No. of

Mines

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 25.0 134.0 196.0 169.3 201.1 235.9 220.6 249.3 310.2

Source: 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 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 Achievements 1975 First export of crude oil 1976 Conclusion of production sharing contract with Shell and Esso 1978 Incorporation of Carigali, the exploration arm. 1980 Incorporation of Asean Bintulu Fertilizer - marking its entry into

petrochemicals 1981 Its first gas station set up in Taman Tun Dr Ismail, Kuala Lumpur 1982 Carigali's first oil discovery in the Dulang oilfield, offshore Terengganu 1983 Malaysian LNG exported its first shipment of liquified natural gas to Japan First refinery with 30,000 bpd capacity in Kertih, Terengganu came onstream 1984 HQ move to Kompleks Dayabumi 1985 First fertilizer export. First liquified export. 1990 First overseas operation - Myanmar 1994 Petronas Dagangan Bhd - first subsidiary listed on KLSE 1997 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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