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Kota Kinabalu: Sabah Mineral Management Sdn Bhd (SMM), a wholly owned entity of the State Government of Sabah, has transitioned into a revenue-generating entity while strengthening the State’s stewardship over its mineral resources.

To date, SMM has facilitated the State Government of Sabah in the issuance of several prospecting licences under strict and comprehensive due diligence.

This progress follows institutional reforms within SMM under the new leadership appointed by the Sabah Chief Minister, aimed at enhancing governance, strengthening due diligence processes, increasing transparency and accountability, and improving regulatory consistency to restore public trust and ensure the people of Sabah truly benefit from the State’s mineral sector.

As part of these reforms, new pre-qualification requirements have been introduced before a company is eligible to apply for a prospecting licence.  

Applicants are now required to undergo a rigorous due diligence process, where only companies that demonstrate strong financial standing, proven technical capability, and a clear commitment to Sabah participation will be allowed to proceed.

Comprehensive background checks are also conducted on the company, its directors and shareholders to ensure only partners with a sound track record, good reputation, and integrity are considered.

These reforms have also delivered tangible results, with SMM recording its first direct contribution of RM1 million to the Sabah State Government last year, alongside its highest net profit since its establishment in 2021.

Mineral prospecting involves substantial costs and commercial risk, borne entirely by the applicants. This includes geological work, environmental assessments, technical studies and compliance obligations, often running into millions of ringgits with no guarantee of success.

From the State’s perspective, the prospecting phase therefore represents a low-risk approach to mineral sector development as the financial and operational risks are borne entirely by applicants, while Sabah gains access to valuable geological and technical data.

According to SMM Chief Executive Officer (CEO) Natasha Sim, who briefed Sabah Publishing House Deputy General Manager Dexter Yeh during a courtesy call at the SMM office in Plaza Shell, only 30% of Sabah has been comprehensively mapped for its mineral deposits by the Department of Mineral and Geoscience Sabah (JMG).

Incoming prospecting activities thus present an important opportunity for the State to expand its mineral data.

Under the current development model overseen by SMM, the State bears no financial cost or liability throughout the prospecting phase, while securing full ownership of all mineral data generated.

This is especially significant given that only about 30% of Sabah’s land area has been previously explored 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 strategic pathway for Sabah to reclaim ownership of its geological data, expand knowledge of its mineral potential, and systematically explore the remaining 70% of land area for which little or no information currently exists.

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 all necessary diligence, safeguards, and approvals have been completed.