The emergence of the Omicron variant of COVID-19 is delaying Malaysia Smelting Corporation’s ability to lift its force majeure.
Malaysia Smelting Corporation (MSC) has been in a force majeure since June 2021 due to the shutdown enforced by Malaysia’s government in response to the COVID-19 outbreak in the country.
In a force majeure, a company is exempt from liability or obligation due to circumstances beyond its control – in this case, MSC was unable to produce tin due to the government’s decision. This has significantly impacted the tin market due to the company’s position as the third-largest producer of refined tin globally.
In recent months, the Malaysian lockdown has eased, but the force majeure has remained in place.
MSC has been producing some tin in the period since the Malaysian lockdown was lifted. “Even while we have had the force majeure, we were smelting and returning tin to customers” confirmed MSC CEO Dato’ Dr Patrick Yong in communication with ITA. The company has been prioritising its tolling partners, rather than purchasing tin concentrate.
Yong also expressed his regret that the force majeure would not be lifted as early as previously expected. In an earlier email, Yong had forecast that the smelter would return to normal operations at the end of November. The emergence of the Omicron variant of COVID-19 has complicated matters, however. “We are planning to lift the force majeure sometime this month” explained Yong, “by the looks of things, we should be sticking to this plan, unless there is another worldwide lockdown again due to Omicron”.
Our view: Currently, another global lockdown due to Omicron seems unlikely, with initial data suggesting that existing vaccines are relatively effective against the new variant. However, this will depend strongly on vaccine uptake; globally, just 43% of the population is fully vaccinated, according to Our World in Data, which uses official data from governments and health ministries worldwide. The proportion for Malaysia, however, is much higher (79%), reducing the risk of another strict lockdown.