UPDATE 1-Minmetals makes $1.7 bln offer for Oz Minerals

(SYDNEY, Feb 16 (Reuters) - Chinese trading group Minmetals is offering A$2.6 billion ($1.7 billion) to acquire Oz Minerals Ltd (OZL.AX), the second Chinese resource house to come to the rescue of a debt-troubled Australian mining house in less than a week.

Aluminum Corp of China (Chinalco) has agreed to inject $19.5 billion into Rio Tinto Ltd/Plc (RIO.AX) before it needs to pay the first instalment on $39 billion in debts.

Minmetals and Oz Minerals said the transaction, pitched at 82.5 cents per share, or 50 percent above Oz Minerals' last traded price, will pay off all Oz Minerals' outstanding debts and maintain the company's mining activities, which were under threat of being sold or liquidated.

"Minmetals intends to continue to operate OZ Minerals' portfolio of assets and its acquisition will provide the opportunity to support the development of OZ Minerals' assets and projects," Zhou Zhongshu, chairman of Minmetals, said in a joint statement.

The offer has been unanimously recommended by OZ Minerals' board in the absence of a superior one.

OZ Minerals, which has made no secret of its struggle to quickly sell off mines and refinance debt, warned on Friday it faced between A$1.9 billion and A$2.2 billion in impairments on underperforming mines.

OZ Minerals has been trying to unload assets across Australia, Southeast Asia, North America and North Africa to help it meet a Feb. 27 deadline to repay a A$140 million loan.

Failure to make the payment threatened to force OZ, trading in whose shares has been halted since November, into bankruptcy. It is the world's second-biggest zinc miner behind Canada's Teck Cominco (TCKb.TO) and also owns, copper, gold and nickel mines.

It will continue to pursue the sale of its undeveloped Martabe gold and silver mine in Indonesia and the Golden Grove zinc and copper mine in Australia, it said.

Minmetals, which needs the blessing of Australian foreign investment regulators before it can sign off on the deal, expects an answer by April.

Some analysts question the willingness of the Australian government to allow Chinese state-owned enterprises to take big stakes in domestic mining companies at a time when low commodities prices have left companies vulnerable to overseas predators with state funds.

"It looks like a decent price if all the hurdles are passed. But the hurdles look a bit onerous," said Tim Schroeders, portfolio manager at Pengana Capital. "It's far from a done deal."

Rio Tinto is confident the Australia will approve its tie-up with Chinalco. (See [nSYD398850]). ($1=1.529 Australian Dollar) (Reporting by James Regan)