UPDATE 1-Brazil miner Vale says to offer convertible notes

* Vale to offer convertible notes

* Notes must be converted to ADS upon 2012 maturity (Adds bullet points, details, background)

RIO DE JANEIRO, July 6 (Reuters) - Brazilian miner Vale said on Monday it plans to offer notes that will mature in 2012 and mandatorily be converted to American depository shares to be used for general corporate purposes.

The company said the ADS will represent up to an aggregate of some 18.5 million common shares and 47.3 preferred class A shares of Vale, an operation that would bring in some $2 billion reais ($1.0 billion) based on Monday's stock price.

The operation will be underwritten by Citi and J.P. Morgan. The notes will be unsecured and unsubordinated obligations of the company's wholly-owned subsidiary Vale Capital II.

Vale is the world's largest iron ore miner. (Reporting by Brian Ellsworth, Marcelo Teixeira and Cesar Bianconi; editing by Richard Chang and Andre Grenon)