UPDATE 1-Zinifex says expects lower earnings in H2

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SYDNEY, May 13 (Reuters) - Zinc miner Zinifex Ltd ZFX.AX said on Tuesday it expected lower second-half earnings as weaker zinc prices and higher costs outweigh a rise in sales.

Zinifex, which is on the verge of buying a nickel mining company and is merging with copper and gold miner Oxiana Ltd OXR.AX to spread its exposure away from zinc, said cost pressures included higher energy and labour costs.

It also said it was spending on exploration to shore up new reserves, further cutting into its bottom line, according to a slide presentation released to the Australian stock exchange.

Zinifex, which last year sold its extensive smelting businesses into a European-listed company, Nyrstar (NYR.BR), to focus on mining, said it was now being forced to pay more in treatment charges to run its ore through third-party smelting firms.

Last year zinc tumbled off its all-time high at $4,600 a tonne on the London Metal Exchange to its current price of around $2,200 a tonne for delivery in three months MZN3 on expectations that availability of the metal would swell with the development of new mines.

Zinifex supplies about 5 percent of the world's zinc in concentrate, or ground ore form, from its mines in Australia.

The company is in the process of merging with fellow Australian Oxiana and is buying Allegiance Mining Ltd AGM.AX, which is scheduled to start mining nickel from its Avebury project in Tasmania this year under the Zinifex banner.

Oxiana and Zinifex have agreed to a A$6.2 billion ($5.8 billion) merger.

First-half profit reported by Zinifex of A$1.039 billion earlier this year was up 74 percent year-on-year.

Zinifex shares were down 0.6 percent at A$10.36 at 0241 GMT, lagging a flat broader market. ($1=A$1.06) (Reporting by James Regan; Editing by James Thornhill)