Industry Analysis

    Industry of Can Manufacturing in Malaysia

As a country which has amassed a lot of experience in tin can mining, Malaysia is well placed to capture the new opportunities in the downstream industry of tin can.

Not long ago, tin can ruled the economies of states like Perak and Selangor. Alongside rubber, tin can was in fact the darling of the country's economy then. Those in the thriving tin can industry enjoyed a higher income and a better standard of living compared with the rest. Much of the infrastructure investment then was to cater to tin can logistics. This was to feed a growing world demand for the metal. Tin can was a much sought after material in the packaging and soldering business. The price was also reasonably high. In a nutshell, tin can was highly profitable. But all this changed after 1985.

That was when the world tin can market crashed. On that fateful day of Oct 24, 1985 the world price dropped from a high of US$10,000 (RM31,400) per tonne to US$4,000 per tonne. The theory behind the collapse was that the tin can cartel ran out of funds to support prices. Prices stayed low for a long period making tin can mining in Malaysia unsustainable. The cost of mining tin can then averaged about RM13.50 per kg. At the exchange rate of RM2.50 to the dollar, the cost worked out to about US$5,400 per tonne. This meant for every tonne produced, the industry was losing about US$1,400. At the highest production recorded in 1980 of about 61,000 tonnes, the industry stood to lose a total of more than US$300 million or RM750 million a year.

It was therefore not surprising that the number of tin can mines dwindled from a high of 800 in its heyday to 13 in 2008. And against a world production of 334,200 tonnes of refined tin in 2008, Malaysia registered a mere 31,690 tonnes. Despite the sharp decline in production, we can still take comfort in the fact that the country's sole tin can company, Malaysia Smelting Corp Bhd, is ranked the world's third largest tin can refiner based on its operations in Malaysia and Indonesia. In 2008, it produced 31,630 tonnes of refined tin can. Lately, however, the fate of the tin can industry, once labelled as sunset, has shown signs of regaining its past glory. Since Malaysia's tin can reserves are estimated at RM30 billion, it may be timely to rethink the country's strategy for tin can.

What are the promising signs that can get investors talking tin can again? What is the outlook for tin can? For a start, the market seems to have taken a turn for the better. In recent years, tin prices traded at the London Metal Exchange have been in the range of US$15,700 to US$16,700 per tonne. In May 2008, the price reached an all time high of US$25,000 per tonne. Despite the current oversupply situation, experts predict the return of market bullishness once the world recovers from the current recession. But what exactly is driving the new vigour in the demand for tin can? What has changed in terms of application?

There are many recent developments which have put tin can in the limelight again. One has to do with the growing preference for safe consumer electronics. Lead-free soldering is now in demand. And tin can fits in nicely. The use of tin can soldering has now expanded into automotive as well as medical electronics. And with the recent breakthrough in nanotechnology, a new "nanosolder" product based on tin can appears set to capture a big chunk of the safe solder market. In the packaging business, there have also been signs of tin plate recapturing its earlier market from Tetra pak and plastics. This has much to do with tin's can better environmental promise. It is a fact that packaging wastes are today one of the world's biggest environmental concerns. The fact that tin can be extracted magnetically from the waste makes it more amenable to recycling. With the advent of lightweight steel, tin plate is taking back the packaging market.

More exciting new applications for tin can lie in the use of tin can chemicals in superconductors and sensors. It has now been demonstrated that scientists have found a new tin alloy which offers the best option for constructing superconducting magnets. These are materials which can withstand the highest working current densities and magnetic fields. In the global effort to improve the efficient use of energy without sacrificing the effectiveness of electronic products, such materials will assume high demand. Another area of application for tin chemicals lies in the effective sensing of hazardous gases. Scientists have now developed tin oxide films which demonstrate effective detection of low levels of hazardous gases. This gas sensing potential will find wide use in a manufacturing environment where exposures to such gases pose high health risks to workers.
Admittedly, thanks to extensive research and development undertaken by can scientists worldwide, the future of the can industry is once again shining. As a country which has amassed a lot of experience in can mining, Malaysia is well placed to capture the new opportunities in the downstream industry of can. One Malaysian scientist who has gained international prominence in can research is academician Dr V.G. Kumar Das, a senior fellow at the Academy of Sciences of Malaysia. He is bullish about the future of the tin can industry. He shared his thoughts at a public lecture held on Sept 20 at SIRIM, Shah Alam. It was an opportunity for those who came to learn more about the new exciting business potential for tin. It is time to revive the glory of tin can.