UPDATE 2-Nyrstar lowers 2011 zinc mining target

* Nyrstar cuts mining target to 205,000-215,000 tonnes

* Says average zinc price fell 1 pct in Q3 from Q2

* Zinc price fall, if sustained, would hit 2011 results

* Nyrstar shares opened about 6 percent lower (Adds COO, CFO comments, share price reaction)

BRUSSELS, Oct 26 (Reuters) - Belgium's Nyrstar SA , the world's biggest zinc producer, has lowered its guidance for the zinc it will mine this year, given setbacks at its Tennessee mines and a production downgrade by Finnish partner Talvivaara .

Nyrstar cut its 2011 zinc in concentrate production target to a range of 205,000 to 215,000 tonnes from its previous target of 215,000 tonnes.

Finnish miner Talvivaara, which mainly mines nickel but has an agreement with Nyrstar for the supply of zinc, cut its output target in early October.

Nyrstar said it now anticipates approximately 32,000 tonnes of zinc in concentrate to be dug out by Talvivaara.

"It is a world-class facility. They have some technical, operational and systematic issues at the moment. They're getting on top of them, just a bit slower than hoped," Chief Operation Officer Greg McMillan said during a conference call.

Nyrstar's Tennessee mines suffered from problems with equipment and repairs required to underground infrastructure.

"We are very confident that in 2012 we will be able to demonstrate a significantly improved performance at both those operations," McMillan said.

Nyrstar shares opened about 6 percent lower on Wednesday and traded 4.3 percent lower at 1000 GMT, sharply underperforming the STOXX 600 Europe Basic Resources Index which traded 0.2 percent lower.

Nyrstar said the zinc price continued to be volatile in the third quarter, with the average price falling to $2,223 per tonne, though this was partially offset by a stronger dollar.

The group said that the zinc price decline, which continued into the fourth quarter, would negatively impact its financial performance for 2011.

The three-month forward prices for zinc has fallen from some $2,500 per tonne at the end of July to below $1,900 now.

"All the smelting operations are profitable at $1,800, assuming they meet their volume targets," McMillan said, but said that this was not the case for the industry as a whole.

"The information coming out of China at present, is that at these prices a number of smelters have shut because they are just not profitable," he said.

Nyrstar said its smelter production in the third quarter was about 244,000 tonnes with all but one unit working at full capacity.

By increasing its focus on mining, Nyrstar aims to produce 50 percent of its raw material needs in the medium term.

Nyrstar said that assuming all of its mines operated at full production it would produce 43 percent of the zinc in concentrate it needs.

The group said it continued to look at takeover opportunities in the mining sector.

"We are actively working on a number of files, 2 to 3 that could materialise given we find a willing seller", Chief Financial Officer Heinz Eigner said. (Reporting By Robert-Jan Bartunek; editing by Philip Blenkinsop and Jane Merriman)