Officers discovered unexploded shells upon boarding the Chinese-registered vessel, which was detained for illegal anchorage at the weekend, said Nurul Hizam Zakaria, Malaysian Maritime Enforcement Agency chief in Johor state.
"Our investigation is now directed to where these cannon shells originated from. Right now, we have officers from multi-agencies searching the big ship," he told AFP.
Nurul Hizam said the vessel from the city of Fuzhou had a crew of 32 comprising 21 Chinese nationals, 10 Bangladeshis and one Malaysian, some of whom were in coast guard custody for questioning.
"This case also involves the discovery of explosives," he said.
China's foreign affairs ministry said the Chinese embassy in Malaysia was in close communication with local authorities "to understand the situation".
It asked Malaysia to handle the case "fairly and in accordance with the law". Beijing also asked Malaysia to protect the rights and safety of Chinese citizens.
A senior Malaysian maritime official told AFP on condition of anonymity that the pieces of metal and shells could have originated from two sunken British warships.
More than 800 British sailors were killed when the HMS Prince of Wales and HMS Repulse were torpedoed by Japanese aircraft in the South China Sea.
The attack on December 10, 1941, happened three days after Japan attacked the US fleet in Pearl Harbor, Hawaii.
Photos and a video shared by the Malaysian coast guard showed large pieces of corroded metal and shells, as well as a large crane and gas torches used to cut metal on board the ship.
The shells could also be linked to the discovery of unexploded World War II-era ordnance at a jetty in Johor on May 19, the maritime agency said in a statement Monday.
Nurul Hizam said the maritime agency would not tolerate any form of illegal salvage activities in Malaysian waters.
"Our national treasure must be protected and preserved," he said, describing looting as "an uncivilised act".
Britain's Ministry of Defence condemned the "desecration" of maritime military graves after reports that scavengers had targeted two WWII wrecks, the BBC said Saturday.
Malaysia's New Straits Times newspaper reported in recent weeks that illegal salvage operators had targeted high-grade aluminium and brass fixtures from the two British warships.
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