* Cuts 2014 zinc output forecast to 575,000-600,000 T
* Q2 output at Century mine in Australia down 13 pct yoy
* MMG pours water on mkt talk it's eyeing BHP nickel asset
By James Regan
SYDNEY, July 17 China's MMG Ltd cut
its 2014 zinc output target and said mounting supply concerns,
heightened by the pending closure of its key Century mine in
Australia, were driving world prices of the rust-inhibiting
The mine, one of world's biggest sources of zinc, is set to
run dry next year, removing close to a half-million tonnes of
the metal from the 13-million-tonne global market.
That has helped spark a rush among firms such as Glencore
and Nyrstar to find new zinc deposits to feed
rising demand from China which is buying the metal to rust-proof
new cars and coat steel.
London Metal Exchange three-month zinc traded at its
highest price in almost three years this week. Prices have
climbed 20 percent since late March.
MMG, the Hong Kong-listed offshore arm of China's
state-owned Minmetals Corp, cut on Thursday its 2014 output
target to between 575,000 and 600,000 tonnes of zinc in
concentrate from 600,000-625,000, following an underperforming
second quarter at the Century mine.
The Century mine's second-quarter output was down 13 percent
year-on-year to 110,891 tonnes. Nyrstar's refineries in Europe
are the main buyers of zinc mined by MMG.
"What we are seeing now is a recognition that not only
Century but a number of other mines are coming to an end,"
Andrew Michelmore, managing director of MMG, said in a
conference call with media and analysts.
"Concentrate is going to get tighter and tighter."
MMG's Dugald River deposit in Australia is being assessed
for future development, but at best will only partially replace
lost output from the Century mine.
Canada's big Brunswick and Perseverance mines closed last
year, eliminating a combined 335,000 tonnes of zinc, while
ageing mines in Europe and Africa are also close to depletion.
Zinc is primarily used as an anti-corrosive in the
The global zinc market fell into a 194,000 tonne deficit in
the five months to May 31, according to industry tracker
International Lead and Zinc Study Group. That is more than 10
times the deficit recorded in the first 11 months of 2013.
Michelmore also watered down speculation it was circling
fellow miner BHP Billiton's Australian nickel assets.
BHP has earmarked Nickel West for sale or spinoff to
focus on production of iron ore and other commodities,
triggering speculation MMG was among a handful of mining
companies showing interest.
Rather than new acquisitions, MMG's immediate focus was on
completing its $5.85 billion purchase of Peru's Las Bambas
copper mining project from Glencore, Michelmore said.
(Editing by Muralikumar Anantharaman)