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Daily Express
2 days ago
- Business
- Daily Express
SMM and truth about Sabah mining permits
Published on: Sunday, August 10, 2025 Published on: Sun, Aug 10, 2025 By: Datuk Roger Chin Text Size: IN recent months, Sabah Mineral Management Sdn Bhd (SMM) has found itself at the centre of political and public controversy. Commentators, news portals, and social media voices have questioned its role, legitimacy, and power — particularly in the context of mineral licensing. Accusations have ranged from misconduct to claims of political manipulation. But in the rush to assign blame, fundamental facts have been lost. Advertisement SMM is not a secretive gatekeeper. It does not issue mining licences, approve them, or profit from them. It is not a commercial miner. It is a government-owned coordination agency created to bring order, integrity, and structure to Sabah's mining sector — a sector long marred by unregulated claims, opportunism, and jurisdictional confusion. An Institutional Response to a Broken Past Before SMM was established, applications for mining and prospecting licences in Sabah were handled by a patchwork of departments, often with limited coordination and varying standards. Advertisement This created fertile ground for speculative land grabs, poor documentation, overlapping land claims, and disputes that harmed investor confidence and state interests alike. Recognising this, the Sabah Government formed SMM as a centralised, professionally managed, state-owned company to act as a one-stop agency — not to replace legal processes, but to ensure they are followed properly. SMM exists to serve the public interest by: Screening and processing licence applications Coordinating due diligence and inter-agency input Ensuring that only qualified, credible applicants proceed Protecting Sabah's land, environment, and sovereignty from misuse What SMM Actually Does SMM operates under the legal framework of the Mining Ordinance 1960, which governs all mineral-related activity in Sabah. Under Section 6 of that Ordinance, the Chief Minister of Sabah alone holds the legal authority to grant mining or prospecting licences. SMM has no such power. It is not a licensing authority. Instead, SMM plays a role before the licence stage. When a prospecting application is submitted — whether to the Chief Minister's Office, the Sabah Natural Resources Office (Pejabat Hasil Bumi Sabah), or directly to SMM — the application eventually comes through SMM for vetting. SMM's process includes: Verifying the applicant's financial standing, technical capacity, and local participation Coordinating with other state departments, including: The Department of Lands and Surveys (JTU) Pejabat Hasil Bumi The Sabah Forestry Department Preparing reports and materials for its Board of Directors, which includes senior officials and is chaired by the Chief Minister himself. One key strength of SMM's governance structure is the presence of a Board of Directors, which allows for greater flexibility and depth in decision-making. Unlike rigid ministerial structures, a BOD can include subject-matter experts from outside the civil service — such as geologists, legal professionals, industry practitioners, or community representatives — who bring specialised insight not always available within government departments. This broadens the State's capacity to assess applications and policies based on real-world knowledge, technical competence, and independent judgement. If the Board is satisfied, it may grant the applicant 'permission to apply'. This does not mean a licence is granted. It simply means the application is cleared to be formally submitted to JTU for statutory processing, and this is further subject to the applicant submitting all required documents and meeting all stipulated conditions within the given timeframe failing which the permission to apply for a prospecting license will be revoked/cancelled. JTU then consults other technical agencies. If there are no objections, the matter is passed to the Pejabat Hasil Bumi, which makes a recommendation to the Chief Minister. Only after all this can a licence be issued — and it must bear the Chief Minister's express approval. Understanding Prospecting and Mining Licences There is a fundamental distinction between a prospecting licence (PL) and a mining lease (ML) — a distinction often overlooked in public discussions. A prospecting licence merely grants the holder permission to explore a defined area for potential mineral resources. It does not confer any right to extract or commercially mine minerals. Prospecting is investigative in nature, involving geological surveys, soil sampling, and test drilling. Only if sufficient mineral deposits are confirmed, and all regulatory and environmental standards are met, can the holder apply for a mining lease. This distinction is critical because prospecting must be completed before any mining can legally begin. It is not an automatic pathway to mining. In fact, statistics from Sabah and other jurisdictions consistently show that fewer than 5% of PLs ever convert into MLs. Most prospecting efforts do not result in economically viable discoveries, environmental approvals, or government endorsement for mining. Moreover, when a mining lease is eventually issued, it is significantly smaller in area than the original prospecting licence. This is by design. The purpose of the PL is to allow a wide survey area to identify where mineralisation may exist. But once confirmed, a mining lease is granted only for the specific zone where extraction is feasible and justifiable — usually a fraction of the PL's original footprint. It is also worth noting that prospecting involves substantial costs and commercial risk, borne entirely by the applicant. This includes geological work, environmental assessments, technical studies, and compliance obligations — often running into millions of ringgit with no guarantee of success. From the State's perspective, this represents a low-risk approach to mineral sector development. The State incurs no financial cost or liability during the prospecting phase, but gains key advantages: most importantly, the data collected during prospecting belongs to the State. This is especially significant given that only about 30% of Sabah's land area has been initially explored or prospected in the past, mainly by the federal Department of Minerals and Geoscience (JMG), and even then the State does not own that data. The current licensing process is therefore a way for Sabah to reclaim ownership of its geological data, expand knowledge of its mineral potential, and begin to systematically explore the remaining 70% of land area for which little or no data currently exists. Finally, while the State bears no cost during prospecting, it becomes directly involved at the mining stage. If and when a mining lease is approved, the State participates through royalties, fees, land use payments, and in some cases, equity participation. This ensures that the commercial benefits of resource extraction flow back to the people of Sabah — but only once the necessary diligence, safeguards, and approvals have been completed. Understanding all this helps dispel the myth that large-scale mining automatically follows a PL. In practice, most prospecting does not result in mining, and any actual mining operation is subject to a much higher threshold of scrutiny, compliance, and public accountability. Misunderstanding 'Permission to Apply' A great deal of confusion has arisen from SMM's letters stating that a company has been given 'permission to apply' for a prospecting licence. These are often misrepresented as proof that a licence has been granted or promised. They are not. Such letters are procedural notifications, confirming that SMM's internal checks are complete and that the application may now enter the government's formal decision-making pipeline. The process is still ongoing. A licence may still be denied — for example, if land overlaps are discovered, environmental objections arise, or government policy changes. This misunderstanding has allowed some applicants to claim approvals that do not legally exist, fuelling public distrust and institutional confusion. SMM and Sabah's Rights Over Resources SMM also serves a deeper political and constitutional purpose. Under the Malaysia Agreement 1963 (MA63), Sabah has rights over land and natural resources. The creation of SMM is consistent with that entitlement. It reflects the State Government's intent to exercise greater control over how its resources are managed, and by whom. Rather than rely entirely on federal departments or fragmented state units, Sabah has taken steps to build its own administrative capacity. In doing so, it is asserting its autonomy in practical, not just rhetorical, terms. Why the Sabah State Assembly Is Not Involved Some have questioned why SMM or the licensing process does not involve the State Legislative Assembly. The answer is straightforward - the Mining Ordinance 1960 provides a clear executive procedure for handling applications. Licences are issued under the authority of the Chief Minister, via the administrative system. The Assembly plays no direct role because licensing is an executive function, not a legislative one. The system is designed to be governed by law and executed through proper administrative machinery, not political debate. The Value of SMM As Sabah positions itself for greater economic self-determination, institutions like SMM are vital. Without them, the state risks returning to a system where licences are pursued through backdoors, unclear processes, or political favour. SMM helps ensure that all applicants — whether local or foreign, connected or not — are subject to the same procedures, requirements, and scrutiny. This is not a barrier to investment. It is a defence of due process — and, by extension, of public confidence in the rule of law. Why SMM Matters Now More Than Ever Sabah Mineral Management Sdn Bhd is not a mining company. It does not grant licences. It is not a political instrument. It is a structured, law-governed agency tasked with protecting Sabah's interests in one of its most valuable sectors. In an age of suspicion and speculation, institutions like SMM matter more than ever. They do not exist to make decisions for Sabah, but to ensure that those decisions — when made — are legitimate, lawful, and in the public interest. If we want a future where Sabah's resources benefit its people, where applications are judged on merit, and where the law matters more than influence, then we need more agencies like SMM — not fewer. The views expressed here are the views of the writer and do not necessarily reflect those of the Daily Express. If you have something to share, write to us at: [email protected]
Daily Express
03-08-2025
- Business
- Daily Express
Sabah needs new Department of Mineral Mining: Any decision on developing Sabah's mineral wealth must be in the interest of Sabahans and the State
Published on: Sunday, August 03, 2025 Published on: Sun, Aug 03, 2025 By: Tengku Datuk Fuad Tengku Ahmad Text Size: FOLLOWING on last week's article ( 'Bumi Suria is hoo-ha over nothing'; Daily Express 27.7.2025 ), it is timely to analyse and discuss some of the reforms necessary to advance Sabah's mineral mining administration and policies. This article will explore some administrative reforms which should be implemented to both modernise and clarify the decision-making process in respect of mining rights in Sabah. To start, no discussion concerning Sabah mining can proceed without first considering the role and functions of Sabah Mineral Management Sdn Bhd ('SMM'). SMM was incorporated in 2006 under the name Sabah Capital Sdn Bhd , as a sendirian berhad (a private company limited by shares) with a total paid-up capital of RM12 million. As of 24.7.2025, SMM's nature of business is listed as 'Investment Holding' . In 2021, the company changed its name officially from Sabah Capital Sdn Bhd to Sabah Mineral Management Sdn Bhd . From this, a few things stand out. Why is SMM's nature of business listed as 'Investment Holding' when the company holds itself out a government-linked company whose purpose is to facilitate and manage all mining and mineral development in Sabah? Second, it is unclear how a private limited company can seemingly exercise governmental powers in assessing and approving mining permits and licences issued under the Mining Ordinance 1960 ('MO')? Third, it is curious why SMM is not located closer to the Lands and Survey Department or the Chief Minister's office since both exercise decision-making powers under the MO? Finally, what advantages are there in outsourcing to SMM the mining licence and permit approvals process? Sabah Mineral Management Sdn Bhd is a government-linked company ('GLC') A company search reveals that SMM is a wholly owned subsidiary of The Chief Minister, Incorporated ('CMI'). CMI is a special purpose corporation created under the Chief Minister (Incorporation) Ordinance which enables the Sabah Government to hold assets through the office of the Chief Minister as if the same were a company. This alone shows that SMM is indeed a GLC. Moreover, the Board of SMM includes the Chief Minister, the Chief Conservator or Forests, The Secretary of Natural Resources, the State Attorney-General, State Secretary and other senior government officials. On its surface, it appears that SMM seems to function as a quasi-government department with one important difference: SMM is still a sendirian berhad and is subject to the provisions of the Companies Act 2016. It is not a government department and is not subject to the protections provided under the Government Proceedings Act 1956 or the Public Authorities Protection Act 1948, among others. More importantly, the purpose and functions of a private limited company are very different from those of a government department. Can / should SMM assess and approve permits and licences under the Mining Ordinance ('MO')? It is easy to assume that it is lawful for SMM to exercise governmental decision-making powers simply because it is owned by the Sabah government and where the Chief Minister and other senior officials sit on SMM's board. A layman would be forgiven for asking what is the difference between a decision made by SMM and one made by the Sabah government when both are comprised of the Chief Minister and other relevant government officials? The difference is this: The Companies Act requires the board of private limited companies to make decisions in the interest of the company whereas a government authority or department is constitutionally required to make decisions in the interests of the State of Sabah and its people. So, every time SMM's board holds a meeting, Malaysian company law requires that the board makes decisions in the financial interests of SMM and not the people of Sabah. Failure to observe this can attract legal consequences. This is an important point to observe. The Sabah Government holds the state's mineral resources on trust for the benefit of the people of Sabah. Therefore, any decision concerning the development of Sabah's mineral wealth must be made in the interest of Sabahans and the state – the Chief Minister and his officials must not be constrained from doing so by the restrictive requirements of SMM's board as required by the provisions of the Companies Act. Apart from this apparent inconsistency between corporate and governmental duties and objectives, another issue arises: under what authority does SMM function? From press reporting and other inquires, it appears that SMM's function is to facilitate and manage the mining permit and licence application process in Sabah. Put simply, if you want a mining permit or licence in Sabah, you must apply through SMM. But the question remains, from where and how does SMM derive its powers? SMM does not have statutory recognition The MO does not mention – at all – SMM or any other private corporate body as having a role in the application for or issuance of mining permits or licences. Section 6 of the MO empowers the Director of Lands and Survey to issue mining licences to any person with the approval of the Chief Minister (being the Minister in charge of natural resources). Section 4 MO operates identically in respect of the issuance of mining permits. The MO does not, however, provide for any delegation of the Chief Minister's duties or functions in respect of approving mining permits or licences. Unless specifically permitted by legislation, a Minister or other official cannot delegate their duties, the exercise of their discretion or powers to another person or entity. This would include SMM. The only exception is where the Minister authorises a governmental official to perform some of his functions or duties where the Minister is ultimately accountable to the State Legislative Assembly for the actions of said government official. Additionally, the Delegation of Powers Enactment , 1963 does not assist SMM. Section 3 permits the Chief Minister to delegate the performance of his duties to any person described by name or office. 'Any person described by name or office' in this context means any Sabah government official or governmental office. It does not mean any non-governmental official or entity since, as stated above, the conduct and actions of officials acting under Ministerial power must always remain answerable to the Legislative Assembly. Additionally, and for completeness, there is no Gazette announcing that the Chief Minister has delegated his functions and powers under the MO to SMM as would be required by Section 8 of the Delegation of Powers Enactment. This raises another inconsistency. SMM is purportedly concerned with the development of mineral and mining matters in Sabah. This would clearly designate SMM as being subject to the Minister in charge of natural resources which, is the Chief Minister. And yet, a search of the Warta Kerajaan Negri Sabah reveals that SMM is designated as coming under the Sabah Minister of Finance, who, does not have any direct duties or functions under the MO (See: Warta Kerajaan Negri Sabah, 18 July, 2024). SMM – Cannot make decisions on the Chief Minister's behalf To be fair to SMM, it can be argued that the company only plays an advisory role where it scrutinises mining permit and licence applications and makes a recommendation to the Chief Minister for approval. However, in practice, it is widely perceived that SMM acts as an approving authority and that mining permits and licences will not be issued unless approved by SMM's board of directors. This would imply that mining licence and permit applications are considered and assessed by SMM. The Chief Minister, therefore, must not treat the conclusions of SMM as being final or binding on him or on any exercise of his discretion under the MO. Instead, the Chief Minister should (and does) consider each mining permit or licence application and make a decision based on the merits – the Chief Minister should not appear to delegate the exercise of his discretion to SMM. Moving Forward – Proposed Reforms So, in short, SMM does not have any official statutory or ministerial authority to assess or recommend for approval, mining permit or licence applications in Sabah. SMM, however, has de facto authority because the Sabah Government appears to treat SMM as if it were a government department when in fact its status as a private limited company is – at times - legally inconsistent with that of a government department. Therefore, it is in the best long-term interests of Sabah for the GRS-lead government to create a new Department of Mineral Mining headed by a Commissioner or head of department (an official on par with the Chief Conservator of Forests). By subsuming SMM's de facto duties and functions, it is argued that a new Mineral and Mining Department would not only promote greater transparency in the mining permit and licence application process but moreover, result in more accountability and public consultation in respect of mineral mining policy in Sabah. This would bring the development of mineral mining in Sabah in line with the development and management of the state's forest and timber resources. The creation of a new mining and minerals department must also be accompanied by a modernisation of the Mining Ordinance 1960 where its provisions should be harmonised with the environmental and forestry protections contained in the Forest Enactment 1968. This whole-sale structural and legislative reform of Sabah's mining and mineral management sector should be made a priority under the GRS-lead government since – as recent news on the matter shows – the current state of affairs is no longer sustainable or in the best interests of Sabah. Tengku Datuk Fuad Tengku Ahmad Tengku Fuad is a senior lawyer specialising in commercial and public law and has, and continues to, act for the Sabah Government in complex cases. In 2021 Tengku Fuad was appointed as a member of the Federal Government's Special Task Force to review legal matters related to the sovereignty of Batu Puteh, Middle Rocks and South Ledge and, in 2022, was also appointed to the Federal Government's Special Task Force to resist the Sultan of Sulu's (heirs) claim against Malaysia. Prior to establishing his firm, Tengku Fuad served as a public company director and was involved in the corporate sector. The views expressed here are the views of the writer and do not necessarily reflect those of the Daily Express. If you have something to share, write to us at: [email protected]
