Datuk Dr Patrick Yong thrives on challenges. - Pic by SGX Market Dialogues
A PROBLEM-SOLVER at heart, Datuk Dr Patrick Yong thrives on challenges. The Chief Executive Officer of Malaysia Smelting Corporation
Bhd (MSC), the world's largest independent custom tin smelter, has a razor-sharp mind that belies his 65 years.
"If you don't look forward to or take up challenges, you will grow moss - turning into a stationary stone, one that's no longer rolling or moving forward," quipped the Kuala Lumpur-born engineer by qualification.
Yong began his career with Malaysia's National Electricity Board in the 1970s, after which he moved on to an electrical engineering consultancy role. In 2004, he founded a battery solutions firm, which was subsequently acquired. During
this period, he established his proficiency in electrical distribution systems, and pursued research in the field of efficiency in energy conversion, leading to a PhD in Electrical Engineering.
And in his 60s, just as he was ready to call it a day, a very dear friend presented him the opportunity at MSC. "This was a challenge that spurred me to step out of retirement," Yong recalled.
"Looking at the situation in MSC, I was able to figure out the areas that needed to be fixed. I could see a light at the end of the tunnel - and it wasn't the headlights of an oncoming train - so I took the job."
Yong was appointed MSC's Chief Executive Officer in October 2016, taking over the reins from former CEO Chua Cheong Yong. He was subsequently appointed to the Board as a Non-Independent Executive Director in June this year.
MSC is 54.8% owned by one of Singapore's oldest companies - The Straits Trading Co Ltd - and has been primary-listed on Bursa Malaysia since December 1994. The Group, which completed its secondary listing on SGX Mainboard in January 2011, has a market capitalisation of about S$90 million.
A global leader in custom tin smelting since 1887, MSC produced 27,712 tonnes of the silvery-white metal in 2017, maintaining its ranking as the third-largest supplier globally.
Mining is the Group's largest profit generator. In 2004, MSC expanded upstream through the acquisition of Rahman Hydraulic Tin Sdn Bhd (RHT), which is Malaysia's oldest and largest operating open-pit, hard-rock tin mine in Perak, a state with a rich mining history.
The Group's smelting operations is carried out by its 100-year-old smelter in Butterworth, Penang, which converts tin-bearing ores into high-purity tin metal for industrial applications.
MSC's third source of income is derived from selling finished products to end users. In the mid 90's, the Group began a tin trading and marketing arm under the smelting division, which provides hedging, pricing and marketing links to the Kuala Lumpur Tin Market/London Metal Exchange (KLTM/LME), as well as global consumer markets.
The MSC Straits refined tin brand - registered at KLTM and LME - is accepted worldwide, and has purity ranging from the standard Grade A to the premium grade electrolytic tin.
The Group also owns a 40% stake in Redring Solder (M) Sdn Bhd, which provides entry into a profitable downstream solder manufacturing business with significant growth potential.
Out-of-the-Box
"Many people are surprised by what I do. They say, 'You're an electrical engineer - what are you doing in metallurgy?'," Yong grinned.
"Being an engineer requires logical thinking, analysis and problem-solving abilities. Essentially, it's about getting a business to work in the most efficient way possible. For example, if you're a farmer and you're caught in a wave of
prolonged flooding, what do you do? Stop rearing chickens - rear ducks instead!"
And his mantra? When you know what you do not know, you will be able to find a solution. But if you don't know what you don't know, you end up groping in the dark - and losing a lot of money.
"There will always be things we cannot control - for example, the US dollar-ringgit exchange rate and global tin prices, which are not determined just by demand-supply dynamics, but also politics, and how hedging can be a double-edged sword," Yong noted.
"There's nothing much we can do about those issues, but the rest are technical problems, and technical problems are always the easiest to resolve."
Over the last few years, Yong has been busy clearing up the Group's legacy issues, including stemming the bleed from non-core investments. "These were areas unrelated to our operations, and investments that we didn't have direct control over, all of which were draining our profits," he added.
The next step was to implement a "salvation exercise", where assets were hived off. "We're almost there - the things that we've not done are things we cannot see, and do not know. This leaves the path clear for the Group to move forward."
MSC has been profitable for five of the last 10 years, reporting an average annual revenue of RM2.02 billion over the period. For the years ended 31 December 2017 and 2016, it swung to net incomes of RM16.1 million and RM34.3 million respectively, from net losses of RM4.8 million and RM9.9 million in 2015 and 2014 respectively.
State-of-the-Art
Looking ahead, MSC continues to strengthen its niche expertise in tin across the global supply chain, pursuing growth through organic means and strategic acquisitions. It continues to evaluate investment opportunities, focusing on regions where country risks can be effectively managed, and where mines can be developed and operated with relatively lower cost structures, Yong said.
At the same time, RHT is carrying out exploration activities to uncover new tin mine deposits within Malaysia, so as to ensure a sustained supply of feed intake to support its smelting operations.
It is also conducting a metallurgical test program to determine the characterisation of new deposits, and establish a proper set-up for the processing plant to treat these ores. It will also undertake a pit optimisation analysis to plan a new pit design that is safe and economically profitable.
Another key initiative is upgrading the Group's tin smelting technology - currently in progress at its new Pulau Indah smelting plant in Port Klang - so as to address the production inefficiencies of its aged smelter.
The new facility will use state-of-the-art, extractive technology, with a Top Submerged Lance furnace that implements a comprehensive, single-stage smelting process, instead of the current multi-stage procedure.
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