UPDATE 2-KGHM will pay 2008 dividend-treasury minister

* Size not yet decided

* KGHM says may correct 2009 budget, investment plans

* Shares rise 1.5 pct, outpace market

(Adds KGHM and analyst quotes, market reaction)

By Agnieszka Barteczko and Maciej Onoszko

WARSAW, March 24 (Reuters) - Poland's state-controlled copper producer KGHM KGHM.WA will pay a dividend from last year's profit although the size of the payout has yet to be decided, the treasury minister said on Tuesday.

KGHM and Poland's largest bank PKO BP PKOB.WA have been the largest dividend payers among state-controlled companies, last year providing half of the treasury's 2.6 billion zlotys ($782 million) dividend income from companies its controls.

"I think there will be a dividend," Aleksander Grad told TVN CNBC business channel. "The question is how big."

Last month, KGHM said it would not pay a dividend from its 2008 profit, earmarking 9 billion zlotys for investments to boost copper production and seek deposits outside of Poland.

Last year, the miner raised its dividend by 64 percent after the government-controlled supervisory board overruled the managements' initial proposal for the payout. Analysts fear high dividend might curb KGHM's current investment plans.

"Whether the management will have to cut investments depends on the dividend level," said Robert Maj, analyst at KBC Securities. "There is risk that CAPEX will be cut."

"Our budget assumed that 2008 earnings will stay at the company," KGHM spokeswoman Monika Kowalska said. "If the dividend is to be paid out, our budget will have to be corrected. That also relates to investments."

The miner sees its 2009 net profit falling 83 percent to 488 million zlotys as hedging and dividends from its stake in a local mobile phone operator will offset losses from mining and smelting operations because of lower copper prices MCU3.

Grad said the treasury may miss this year's target of collecting 2.9 billion zlotys in dividends from state-controlled companies but added: "We will be close."

KBC's Maj expects KGHM could allot 20 percent of its 2008 net profit for dividend, which would peg the payout at around 580 million zlotys.

At 1221 GMT shares in KGHM rose 1.5 percent, outpacing a 0.6-percent gain for the bluechip WIG20 index .WIG20. The company is one of this year's best performers in Warsaw, rising 76 percent agains a 13-percent loss for the WIG20 on a bounce-back in copper prices. (Writing by Adrian Krajewski; Editing by Andrew Macdonald and David Cowell) ($1=3.325 Zloty)