UPDATE 1-Minmetals: no progress to extend Australia Century zinc mine

* Minmetals eyes 2014 start to Australia’s Dugald zinc mine

* Exploration so far fails to turn up more zinc at giant Century mine

* Plans to close Century in 2015 unless more zinc can be found (Recasts, adds details)

SYDNEY, Jan 24 (Reuters) - Efforts to extend the operating life of Australia’s Century zinc mine, the world’s second largest, have so far failed, with the mine set for closure in 2015, owner Hong Kong-listed Minmetals Resources Ltd said on Monday.

Minmetals also said the neighbouring Dugald River zinc project could be in production during 2014, though at a production rate of less half that of the Century mine.

Minmetals’ Australian unit MMG has been conducting exploration work at the Century mine for more than a year in hopes of unearthing sufficient amounts of zinc ores to maintain operations into the latter-half of the decade.

“The exploration that we have been doing around Century for quite a long time has failed to produce any evidence of a major extension of the orebody,” a MMG spokesman said by telephone from MMG’s headquarters in Melbourne.

“We’re hoping to find an extension and continuing to look for it. But on the current mine plan the end of life is around 2015 and we’ve really got to start putting that plan in place,” the spokesman said.

MMG earlier on Monday said its expects to commit to development of the Dugald River project in mid-2011 and subject to certain approvals, would be in production during 2014.

At its peak, Minmetals estimates Dugald River will produce concentrates containing about of 200,000 tonnes of zinc a year. Century in 2010 yielded just over 500,000 tonnes of zinc in concentrate, making it the second largest zinc mine behind Teck Resources’ Red Dog mine in Alaska.

Under that scenario, the current worldwide glut of zinc would be entirely removed if it were to remain constant over the next four years, based on data.

The global zinc market was in surplus by 223,000 tonnes in the first 11 months of 2010, according to the International Lead and Zinc Study Group (ILZSG)

Teck Resources last year announced it will proceed with an expansion of the Red Dog zinc mine, avoiding a potential closure that would have stripped out more than 5 percent of global zinc production.

Zinc futures are little changed from a year ago but up 15 percent since early December to $2,358 a tonne ($1.07 a pound).

ANZ Bank senior commodities analyst Mark Pervan expects zinc to average between $1.10 and $1.12 a pound ($2,425-$2,470 a tonne) this year.

MMG said it had released an environmental impact statement on the Dugald River project, with the document open for public comment until March 7, 2011.

The release of the document is the next important step for the project before it can be developed. A 2008 economic feasibility study was updated in 2010. (Editing by Ed Davies)