* First Quantum, Lundin may interest Minmetals - analysts
* Minmetals shares up 3 percent after hefty fall
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By Clara Ferreira-Marques and Michael Smith
LONDON/SYDNEY, April 27 (Reuters) - Minmetals Resources, a unit of the China's biggest metals trading company, faces a challenge to find a suitable bid target after it was outgunned in the race to buy miner Equinox.
Minmetals on Tuesday pulled its bid for Equinox, an opportunity to tap the rich Zambian copper belt, after Barrick Gold Corp, the world's largest gold miner, topped it with a C$7.3 billion ($7.7 billion) offer.
Analysts and bankers said on Wednesday that while Minmetals executives may earn credit for not overpaying for a deal, they will now be back at the drawing board eyeing limited alternatives.
China, which accounts for 40 percent of the world's demand for copper, is chasing mining assets as prices for the red metal hover near record highs.
However, achievable targets in the sector among growth assets are scarce, sizeable copper deals are even scarcer and the record for completing large deals is poor.
Minmetals could look to Equinox peers like Vancouver-based First Quantum Minerals, which also has large Zambian operations, or even to smaller-scale companies in the earlier stages of production in growth regions like Sudan or Eritrea, analysts said. But a fresh bid is unlikely to be imminent.
"I do not think Equinox is a one-off play," John McGloin, analyst at Collins Stewart in London said.
"I am sure that they are going to continue looking around. Whether they continue looking at Africa or move their sights to Latin America (is the issue). If they want Zambia, they really only have First Quantum and Vedanta."
First Quantum, with a market cap of C$11.8 billion and trading at a 2012 price-to-earnings multiple of around 10 times PE, below the sector average, operates Kansanshi, the world's eighth-largest copper mine and Zambia's largest by output.
London-based Vedanta, a far more diversified player currently moving into oil, has a market value of $10.3 billion and is still majority-owned by its founder, Anil Agarwal, making it a far tougher -- and less attractive -- target.
"First Quantum is right in the firing line. Its assets are mostly Zambia, Mauritania and they have Sweden and Australia," John Meyer at broker Fairfax said.
"It would be very easy for Minmetals to bid for First Quantum and if there were regulatory issues over Ravensthorpe (nickel operation) in Australia they could spin that one out."
Others, however, said a more diversified miner like First Quantum may not appeal to Minmetals, which had eyed Equinox for its copper focus.
Minmetals is a unit of state-run China Minmetals Corp, which has previously failed in its attempts at buying Canadian mining assets. In 2004, the Canadian government blocked China Minmetals efforts to buy Noranda, a copper mining company.
"Minmetals is looking at overseas acquisitions with focus on copper mines, as the metal is still in short supply," said Helen Lau an analyst with UOB Kay Hian.
Being a state-backed company, Minmetals will have access to sufficient funds to pursue large transactions, she added.
POSSIBLE TARGETS
Analysts said other copper targets for Minmetals could include Canadian group Lundin Mining, jilted by Equinox, and Inmet, which failed to merge with Lundin earlier in the year to create a $9 billion copper miner.
Others could include larger players like Antofagasta, majority-owned by the Luksic family, Australian group PanAust and Canadian company Ivanhoe Mines.
But these companies are either huge compared with Minmetals or have controlling founding families or miner rivals as large shareholders -- as with the case of Rio Tinto's 42 percent stake in Ivanhoe, which owns 66 percent of the world class Oyu Tolgoi deposit in Mongolia.
China's Guangdong Rising Assets Management has a 19.9 percent stake in PanAust.
Minmetals could also "take a breather," one analyst said.
"There is no need to rush out to buy something. They do not have to do it simply because they have the money," said the Sydney-based analyst who declined to be named.
Minmetals currently operates copper, zinc, lead, silver and gold mines largely in Australia and some in North America.
According to a company presentation, by fiscal 2015, about 63 percent of its business would consist of zinc, 25 percent copper and 6 percent lead.
Minmetals shares closed up 2.9 percent on Wednesday, partially recovering from the double-digit drubbing they suffered the day before after saying it would not pursue its Equinox bid. (Additional reporting by Fayen Wong in Shanghai, Alison Leung and Denny Thomas in Hong Kong; Editing by Lincoln Feast and Erica Billingham)