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MMG shifts from zinc production as deposits deplete

MMG CEO: We've transitioned from zinc to copper

Hong Kong-listed MMG Ltd. is turning its focus to copper production after closing its biggest zinc mine in earlier this year.

On Tuesday, MMG reported after-tax loss of $93 million in the first half of 2016, almost double the $48 million loss it swallowed in the same period a year ago. Revenues sank to $586 million from $1.1 billion.

"We really like zinc but Century (mine) finally come to the very end…(it) had a finite life," CEO Andrew Michelmore told CNBC's "Squawk Box ".

Three-month zinc on the London Metal Exchange have jumped some 40 percent in the first half, reaching a one-year high in August as mine closures and production cuts curb supply.

MMG shipped its last cargo from the Century mine in Australia in January as supplies were depleted, causing the company's zinc revenue to slump 73 percent and contributing to global concerns about a zinc supply shortage. Zinc production from Century mine contributed to 4 percent of world production.

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MMG is owned by China's top state-owned metals trader, China Minmetals Corp.

Michelmore said the company will remain in the zinc business, although its contribution to the business will fall significantly.

Copper prices, meanwhile, have been on a steady decline in the last few years with LME three-month copper about 6 percent lower from a year ago.

"This is the bottom of the cycle for copper. This is the right time to come on as the prices start to pick up," said Michelmore.

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