The world's biggest miner on Friday said it had lifted its cash offer to $28.25 a share, a 7.4 per cent premium to OZ Minerals' last close.
The revised offer price is a 13 per cent increase on the $25 a share proposal the suitor's board rejected in August, calling it "opportunistic".
OZ Minerals on Friday said it would grant BHP due diligence for four weeks from November 21 on an exclusive basis.
"The intention of the OZ Minerals board is to unanimously recommend the revised proposal as being in the best interests of OZ Minerals' shareholders in the absence of a superior proposal," the miner said.
The deal comes at a time of rapidly growing demand for battery metals including copper and nickel amid the surging global popularity of electric vehicles.
The transaction, if successful, will allow BHP to consolidate its copper holdings in South Australia, where OZ's Prominent Hill and Carrapateena mines operate adjacent to BHP's Olympic Dam mine and smelting operations.
It would also allow the combination of BHP's Nickel West operations in Western Australia with OZ's West Musgrave copper-nickel operation.
By 1110 AEDT, BHP shares were trading 0.3 per cent higher at $43.93 in a firm Australian market.
OZ Minerals shares were up 4.3 per cent to $27.42 after coming out of a trading half following the announcement of the new offer.
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