Wuhan Iron and Steel, China’s third biggest steelmaker, has agreed to pay US$400m for 21.5 per cent of MMX, a Brazilian iron ore miner.

As part of the deal, Wisco will purchase at least half of the iron ore to be produced at mines that MMX bought in 2007 and 2008 in south-eastern Brazil. MMX said the mines, some of which are still under development, were expected to reach a capacity of 33.7m tonnes a year from 2013.

Wisco signed a separate co-operation agreement with EBX, MMX’s holding company, under which they will begin preparing a potential joint venture to build a steel mill in Rio de Janeiro state. The mill is controlled by LLX, a transport and logistics company in the EBX group.

Mr Eike Batista, the controlling shareholder of MMX, said Wisco’s investment was the biggest equity stake taken by a Chinese company in a Brazilian company. He said projects under way to increase capacity at MMX and LLX would allow the group to reach exports of 150m tonnes of iron ore a year in comings years — about half the amount currently exported by Vale, the world’s largest iron ore producer.