The Mineral Industry of Malaysia in 2016
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2016 Minerals Yearbook MALAYSIA [ADVANCE RELEASE] U.S. Department of the Interior May 2021 U.S. Geological Survey The Mineral Industry of Malaysia By Spencer D. Buteyn In 2016, Malaysia was the 14th-ranked global producer of September, the Government announced on September 7 that the bauxite, down from 3d in 2015, and it remained the 10th-ranked prohibition would be extended until December 31 (Arumugam, global producer of mined tin. Malaysia accounted for 5.3% 2016; Raghu and Pakiam, 2016; Thomson Reuters, 2016b). of global tin reserves. Malaysia’s real gross domestic product Malaysia’s mineral sector is governed by the Mineral (GDP) was valued at $247 billion1 [1.108 trillion Malaysia Development Act 1994 and the State Mineral Enactment. ringgits (MYR)] in 2016—a 4.2% increase compared with the The Mineral Development Act 1994 defines the power of the GDP in 2015, which had increased by 5.0%. This slower rate of Federal Government to regulate and inspect mineral exploration, growth was attributed to low commodity prices and decreasing mining, and related activities. The State Mineral Enactment growth in the value of exports. The service sector remained gives the States the power to issue mineral prospecting and the leading contributor to the GDP in 2016, accounting for exploration licenses and mining leases. Apart from paying a 54.2% of the GDP, followed by the manufacturing sector, which corporate tax to the Federal Government, mine and quarry accounted for 23.0% of the GDP (Anderson, 2017, 2018; Bank operators are required to pay value-based royalties to the State Negara Malaysia, 2017, p. 3, 18, 23; Bray, 2017, 2018). in which their operation is located. Royalty rates depend on the mineral commodity and on the assessment of each of the Minerals in the National Economy individual States. The petroleum industry is governed by the Petroleum Development Act 1974, which established the state- Minerals mined and extracted in Malaysia included barite, owned Petroliam Nasional Berhad (Petronas). The act grants bauxite, clay, coal, gold, ilmenite, iron ore, limestone, monazite, exclusive rights in the ownership, exploration, and extraction of natural gas, petroleum, silica, silver, struverite (niobium-tantalum petroleum in Malaysia, both onshore and offshore, to Petronas. mineral), tin, and zircon. In addition to these, Malaysia had The Environmental Quality Order 1987 governs environmental identified mineral resources of copper. The mining and quarrying aspects of the mineral industry. Under the order, all mining sector, which accounted for 8.8% of the GDP, increased by 2.7% leases larger than 250 hectares require an environmental in 2016 compared with 4.7% in 2015. In 2016, 97,000 people protection plan that must be approved by the Department of were reported to be employed by the mining and quarrying Environment (Malaysian Chamber of Mines, 2018a, b). sector, down from 104,000 in 2015. Following Indonesia’s ban on the export of bauxite in January 2014, Malaysia became Production an important source of bauxite for China. In 2015, Malaysia accounted for 40% of China’s imported bauxite, up from 10% in The production of bauxite decreased by 97% to an estimated 2014. In 2016, Malaysia’s export of bauxite to China decreased 1.0 Mt following an 885% increase in 2015. Other notable by 69% to 7.45 million metric tons (Mt), and accounted for only decreases in production included that of gold (mine production, 14% of China’s total bauxite imports following the Government Au content), 55%; direct-reduced iron, 31%; raw steel, 27%; of Malaysia’s 2016 prohibition on bauxite mining (Alumina & feldspar, 26%; ilmenite and leucoxene, 26%; zircon, 21%; tin Aluminum Monthly, 2016, p. 10, 18; 2017, p. 9; Bank Negara (smelter production, primary), 11%; niobium (mine production, Malaysia, 2017, p. 18, 23, P5). struverite concentrate), and cement, 10% each. Significant increases in production included that of rutile, 1,820%; rare- Government Policies and Programs earth mineral concentrates (monazite and xenotime), 233%; rare-earth mineral concentrates (rare-earth oxide equivalent), On January 6, 2016, the Government announced a 3-month 180%; silicon (ferrosilicon), 170%; aluminum (metal, primary), prohibition on bauxite mining, which came into effect on 55%; manganese ore (gross weight and Mn content), 42% each; January 15. The prohibition was an effort to halt water rare-earth compounds (rare-earth-oxide equivalent), 21%; clay contamination and large-scale environmental damage that was and shale (unspecified), construction sand and gravel, and silica, attributed to the rapid expansion of bauxite mining that took 15% each: crushed stone, iron ore, and silver, 14% each; and place in 2014–15. Along with the prohibition on mining, the kaolin, 11% (table 1). Government announced that no new export licenses for bauxite would be issued for the duration of the ban. On April 8, the Structure of the Mineral Industry Government announced a 3-month extension of the ban from April 15 to July 15 and, on June 30, the Government extended Malaysia’s mines, quarries, and metal- and industrial the ban for another 2 months until September 15. The extensions mineral-processing facilities were operated by private domestic were an effort to allow the remaining bauxite stockpiled at ports companies and subsidiaries of international companies to be exported. As the stockpiles of bauxite were not cleared by incorporated in Malaysia. The mining and quarrying sector is regulated by Malaysia’s Ministry of National Resources and 1Where necessary, values have been converted from Malaysia ringgits Environment. Petronas, together with its subsidiaries, operated (MYR) to U.S. dollars (US$) at an average annual exchange rate of as an integrated petroleum and gas company in Malaysia MYR4.4850=US$1.00 for 2016. MALAYSIA—2016 [ADVANCE RELEASE] 17.1 and internationally. Petronas engaged in the exploration, Cambodia, Indonesia, Laos, the Philippines, Singapore, Thailand, development, production (liquefaction, manufacturing, and and Vietnam) increased by 5.4% to $52 billion (MYR231 billion) refining), transportation, and sale (trading and marketing) of crude and accounted for 29% of the total value of exports (Malaysia petroleum and natural gas products. It also owned and operated a External Trade Development Corp., 2017, p. 2–6). network of retail stations (table 2; Bloomberg LP, 2018). In 2016, China remained Malaysia’s leading source for imports, accounting for 20% of total imports, followed by Mineral Trade Singapore, 10%; Japan, 8.2%; and the United States, 8.0%. ASEAN member countries accounted for 25% of Malaysia’s In 2016, Malaysia’s exports were valued at about $175 billion total imports. Electrical and electronic products accounted for (MYR786 billion), which was an increase of 1.1% compared 30% of total imports, followed by chemicals and chemical with that of 2015, and imports were valued at about $156 billion products, 9.7%; machinery, equipment, and parts, 9.3%; and (MYR699 billion), which was an increase of 1.9% compared petroleum products, 7.5%. The value of mineral imports, with that of 2015. Manufactured goods remained Malaysia’s excluding petroleum and natural gas, increased by 17% to leading export, increasing in value by 3.2% in 2016 and $2.8 million (MYR12.5 billion). Coal accounted for 48% of accounting for 82.2% of the total value of exports. Mining mineral imports, followed by metallic minerals (46%) and goods accounted for 8.2% of exported goods and decreased in nonmetallic minerals (6%). The value of metallic minerals and value to $14.3 billion (MYR64.3 billion), or by 19.8% compared coal imports increased by 22% and 16%, respectively, whereas with that of 2015. Within mining goods, the value of liquefied the value of nonmetallic minerals decreased by 7.9%. In order of natural gas (LNG) exports decreased by 28.2% to $7.1 billion value, major minerals imported in 2016 were coal, iron ore, tin (MYR32.0 billion) and the value of crude petroleum decreased ore and concentrate, gold, copper ore and concentrate, zircon, by 14.6% to $5.0 billion (MYR22.3 billion). The export value and manganese (Malaysia External Trade Development Corp., of minerals, excluding petroleum and natural gas, decreased by 2017, p. 3, 19). 8.7% to $1.2 billion (MYR5.47 billion) compared with that of 2015. Metallic minerals accounted for 87.7% of mineral exports Commodity Review followed by nonmetallic minerals (11.1%) and coal (1.2%). The value of exported metallic minerals decreased by 12% to Metals about $1.1 billion (MYR4.8 billion) owing to a 77% decrease in the value of bauxite exports. The value of nonmetallic mineral Bauxite and Alumina.—Despite the prohibition on bauxite exports increased by 18% to $139 million (MYR622 million) mining from January 15 to the end of the year, an estimated owing to increased exports of rock aggregates (crushed stone 1.0 Mt of bauxite was produced in Malaysia in 2016. Illegal and sand and gravel), limestone flux, and zircon. The export mining was reported to be taking place in the State of Pahang. value of coal (undifferentiated) increased by 82% to $15 million Bauxite was being stockpiled in three locations within the (MYR66 million). In order of value, major minerals exported Kuantan District of Pahang, the central mining area, the port in 2016 were iron ore, bauxite, copper ore, rock aggregates, at the town Gebeng, and the town of Felda. These stockpiles limestone flux, zircon, and manganese (Malaysia External Trade were estimated to contain 3.6 Mt of bauxite in April, 5.4 Mt in Development Corp., 2017, p. 1, 2, 5, 8–9; Ministry of Natural June, 4.13 Mt in September, and 2.95 Mt in December. These Resource and Environment Malaysia, 2017, p. 2–3). stockpiles remained an immediate environmental concern as China remained Malaysia’s leading trading partner, in terms of rain during the monsoon season could potentially cause polluted total trade value, despite a 2.9% decrease in the value of exports runoff from the stockpiles and further contaminate nearby rivers.