A Chinese mining company said yesterday it has agreed to buy the Itaminas iron ore mine in Brazil from its owner, Bernardo de Mello.

The East China Mineral Exploration and Development Bureau, based in Nanjing, said it had negotiated the asking price for the mine, which produces 3 million tons of high-grade iron ore a year, down to US$1.22 billion from the original asking price of US$2 billion.

"This is indeed an astronomical figure, but it's precisely because of the mine's advantages," the Chinese company said in a statement.

China views access to iron ore supplies as a strategic priority, given the reliance of its steel industry on imports. The country imported 630 million tons of iron ore in 2009, up nearly 42 percent from the year before, and the government has been complaining that soaring costs are harming steel mills.

Chinese mining and energy companies have been hunting for overseas assets to expand their resource base. Last week, mining giant Rio Tinto Ltd and China's Chinalco signed a deal to develop an iron ore reserve in the West African country of Guinea.

The East China Mineral Exploration and Development Bureau is owned by Jiangsu Province, one of China's wealthiest regions, near Shanghai.

Last year, its Jiangsu East China Non-Ferrous Metals Investment Holding Co agreed to invest at least US$8 million in Perth-based Arafura Resources, though the deal lapsed earlier this year without being completed.

"China has the will, and more acquisitions are waiting in the wings," East China Minerals said in the statement.

The Itaminas mine is reported to have reserves of 1.3 billion tons.

"Conditions for development are good, railway and road logistics are smooth," the Chinese company said.