Wuhan Iron & Steel Group, China’s third-biggest steelmaker, agreed to pay $400 million for a stake in Brazil’s MMX Mineracao e Metalicos SA to broaden its supply of iron ore.

Wuhan Steel, based in Hubei province, will become the second-biggest shareholder in MMX and will appoint two board members to MMX, according to a statement today. The size of the stake wasn’t given. Rio de Janeiro-based MMX, controlled by billionaire Eike Batista, has a market value of 3.7 billion reais ($2.1 billion), according to data compiled by Bloomberg.

China, the world’s biggest steel producer, is investing in iron ore projects globally to reduce dependence on Vale SA, Rio Tinto Group and BHP Billiton Ltd., which control three-quarters of seaborne supply. Wuhan Iron and MMX also signed an agreement today to build a steel plant in Brazil, spokesman Bai Fang said in a phone interview from Wuhan, where the deal was signed, without providing details.

“We are still studying the steel venture plan,” Bai said. “Approvals are also needed for the plan to go through.”

Wuhan Steel rose 3.4 percent to close at 8.12 yuan today in Shanghai. The benchmark Shanghai Composite Index gained 3.2 percent.

Wuhan Steel originally offered to buy a stake in MMX and its mining unit in June.

“There has been some changes in the deal,” said Xiao Jinfa, head of Wuhan Steel’s resource development department. “Now the investment is for the stake of the listed company only,” he said, without providing a reason.

Ore Expansion

MMX plans to increase its annual iron ore production capacity to 33.6 million tons by 2014 from 10.7 million tons, Wuhan Steel said in the statement. MMX operates Sudeste mine and Corumba mine in Brazil and Minera mine in Chile, the statement said.

This month, the company won Australian approval for a A$271 million ($249 million) investment in Centrex Metals Ltd.

The Chinese steelmaker also signed a long-term contract in November to buy iron ore from Venezuela’s Corp. Venezolana de Guayana, that country’s only iron ore producer.

Wuhan Iron would seek other investment opportunities in countries including Australia no matter whether the “target is a big miner or not,” Bai said June 23.

China may spend more than $500 billion on foreign resource investments over the next eight years, according to Deloitte Touche Tohmatsu in March.