Malaysia Lost $80 Million in Tin Trading

Malaysia has admitted losing about $80 million in a failed bid in 1981 and 1982 to corner the world tin market and prop up a vital export industry that later collapsed.

“Actions such as this to protect a country’s national interest are not new or unique. Governments all over the world undertake market interventions . . . to further their countries’ economic interests,” Primary Industries Minister Lim Keng Yaik told Parliament in a surprise statement Monday night.

Prime Minister Mahathir Mohamad disclosed in September that Malaysia had been the mysterious operator whose huge purchases had jacked up prices to record levels.

But he alleged that the London Metal Exchange (LME), the world’s premier metals market, had stymied the plan by what he called cheating to protect its members when it changed futures trading rules to make defaulting on delivery only punishable by a fine, relieving traders of possible legal action.

Lim said the exercise was honorable and the need to intervene compelling. “Of paramount importance is that we have to do whatever is necessary to defend and safeguard our country’s national interest and economic stability,” he added.

He revealed that the buying was secretly done by a government-owned company called Maminco, which was financed by loans from state-owned Bank Bumiputra Malaysia.

But losses of $253 million on the operation were offset by profits of $173 million accruing from extra export taxes and duties on higher tin exports prompted by the record prices.

This benefited the economy through what Lim called the multiplier effect and protected the industry and the livelihood of 39,000 miners.