MMG, the Hong Kong-listed overseas mining unit of state-owned metals trading giant China Minmetals, says it will start trial production at its Dugald River zinc mine earlier than it planned, after reporting its best interim profit in five years. The Hong Kong and Melbourne-based firm expects to mine its first tonne of the metal used to galvanise steel to prevent corrosion before year end, compared with the original targeted first half of 2018 as mine construction went ahead of schedule. “Our capital expenditure will also be at the lower end of our guidance of US$600 million to US$620 million,” chief executive Jerry Jiao Jian told reporters and analysts via teleconference on Wednesday. Its coming on stream “is perfectly timed to benefit from zinc price surpassing US$3,000 a tonne in recent days,” he added. The Dugald River zinc mine in Queensland, Australia with targeted annual output of 170,000 tonnes, would partially replace lost output from its much larger Century mine in the same state that was decommissioned late 2015. Average spot market zinc price in London has jumped 50 per cent year on year to US$2,690 a tonne in the year’s first half. Asked to comment on the rally’s sustainability, Jiao said he saw tight supply to persist for both zinc and copper prices until at least 2019, supported by demand recovery in the United States and Europe, and infrastructure demand in nations along the modern Silk Road and Maritime Silk Road thanks to Chinese funding of projects there. MMG on Tuesday reported a net profit of US$113.7 million in the year’s first six months, matching its own projection indicated earlier this month, compared to a loss of US$93 million in the same period last year. First half revenue jumped 231 per cent year on year to US$1.94 billion. The marked turnaround was driven by a 248 per cent rise in first half copper sales to 295,934 tonnes after last year’s commissioning of its Las Bambas project in Peru, one of the world’s 10 largest copper mine by output. The first half profit was also lifted by a 22 per cent year on year rise in average copper price in London’s spot market to US$5,749 a tonne, as well as a US$173.7 million pre-tax profit on the divestments of a gold mine and a zinc mine, both in Australia. Our capital expenditure will also be at the lower end of our guidance of US$600 million to US$620 million Jerry Jiao Jian, MMG The company derived the vast majority of its profit from copper sales. It has copper, zinc, lead and gold production in Australia, Democratic Republic of Congo, Laos and Peru. For the full year, MMG has maintained its targets first indicated in March, to achieve 560,000 to 615,000 tonnes of copper, and 65,000 to 72,000 tonnes of zinc. It produced 290,758 tonnes of copper and 37,519 tonnes of zinc in the first half. An analyst has forecast MMG to record a full year net profit of US$438 million, according to Bloomberg. The Las Bambas project achieved an output of 430,000 tonnes of copper output in its 12 months of operation since commercial operation began in July last year, exceeding its designed annual capacity of 400,000 tonnes. Jiao said MMG was seeking to reduce its production cost of US$1 per pound which already ranks in the lowest 25 per cent among copper projects globally, despite cost inflation pressure in the industry. The company’s US$1.1 billion of cash from operations in the year’s first half, allowed it to pay down US$868 million of debt. Net debt stood at US$8.9 billion at the end of June. Its net finance cost amounted to US$260 million of in the year’s first half. MMG shares closed 4.4 per cent higher on Tuesday at HK$3.77. They have rallied 89.5 per cent year to date, outperforming the Hang Seng Index’s 24.6 per cent gain.