• MSC commenced construction of a RM10m rotary furnace at its Rahman Hydraulic Tin (RHT) mine with completion targeted by 3QFY26 and processing capacity of c.10 tonnes per day, enabling on-site conversion of tin ore into crude tin prior to refining at Pulau Indah.
• The introduction of on-site smelting is expected to reduce c.400km ore transportation, lowering haulage volume and logistics costs, while enhancing mining segment efficiency through improved upstream integration.
• We maintain our earnings forecasts pending clearer visibility on cost savings and utilisation rates with benefits expected to be margin-accretive over the medium term.
• Maintain BUY with an unchanged TP of RM2.37, based on 13x FY26F P/E applied to an EPS of 18.2sen
RM10m Rotary Furnace at RHT. Malaysia Smelting Corporation Berhad (MSC) has commenced construction of a RM10.0m rotary furnace at its Rahman Hydraulic Tin (RHT) mine in Klian Intan, Perak with completion targeted by 3QFY26 and a planned processing capacity of c.10 tonnes per day. The facility will enable MSC to convert tin ore into crude tin metal directly at the mine site prior to downstream refining at its Pulau Indah smelting facility, marking a strategic move to enhance upstream integration at Malaysia’s largest open-cast tin mine.
Our Take. We view the development positively as it enhances MSC’s upstream integration and improves operational efficiency at the RHT mine. Currently, tin ore from RHT is transported c.400km to Pulau Indah for processing. With the introduction of on-site smelting, MSC will instead transport crude tin metal which is lighter and more concentrated, thereby reducing haulage volume, logistics costs and overall transportation complexity. In addition, on-site processing enables improved impurity management at source, shortening processing lead times and enhancing operational flexibility. More importantly, the rotary furnace allows MSC to capture additional value within its mining segment, supporting margin improvement through upstream processing. However, the planned capacity of c.10 tonnes per day (c.3,600 tonnes annually) is modest relative to MSC’s existing annual smelting capacity of c.40,000 tonnes, indicating that the initiative primarily serves as a cost optimisation and margin enhancement measure rather than a meaningful volume growth driver.
Outlook. Following completion in 3QFY26, crude tin produced at RHT will continue to be transported to Pulau Indah for final refining into high-purity tin products for delivery to London Metal Exchange (LME) warehouses and industrial customers, particularly within the electrical and electronics (E&E) segment. The initiative is expected to improve mining segment cost efficiency, reduce dependency on long-distance transportation, and strengthen operational resilience amid potential supply chain disruptions. The development also complements MSC’s broader operational optimisation strategy following the Butterworth smelter closure, further enhancing cost efficiency across the Group’s integrated tin production value chain.
Earnings revision. We make no changes to our earnings forecasts at this juncture pending further management updates on operational cost savings and utilisation rates. While the introduction of the rotary furnace is expected to enhance mining segment efficiency and reduce logistics costs, the financial impact is likely to be modest in the near term given the relatively small processing capacity and expected commissioning only by 3QFY26. Nonetheless, we view the development as strategically positive and margin-accretive over the medium term.
Valuation. We maintain a BUY call on MSC with an unchanged target price of RM2.37, based on 13x FY26F EPS of 18.2sen. Our positive stance is supported by (i) improved mining efficiency following the RHT rotary furnace development, (ii) structural cost savings from the Butterworth smelter closure, and (iii) MSC’s position as the world’s largest independent tin smelter, benefiting from structurally tight tin supply.
Risks. Key downside risks include tin price volatility, geopolitical tensions and war-related disruptions that may affect global tin supply chains, feedstock availability, and logistics costs.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.016085 | 4.043244 |
| EUR | 4.629771 | 4.633392 |
| CNY | 0.582367 | 0.582825 |
| HKD | 0.512520 | 0.516114 |
| SGD | 3.113561 | 3.134881 |