Aug. 20 (Bloomberg) -- ArcelorMittal, the world's biggest steelmaker, agreed to buy London Mining Plc's Brazilian iron-ore unit for about $810 million to increase its self sufficiency in the steelmaking ingredient.

The price of the transaction includes payment to take on loans of about $46 million, Luxembourg-based ArcelorMittal said today in a statement. The unit is expanding production of so- called concentrate and lump ore to 3.2 million metric tons a year, from 1.4 million tons. ArcelorMittal may invest as much as $700 million to raise output to more than 10 million tons.

ArcelorMittal founder Lakshmi Mittal is seeking to expand his company's raw-material supplies after iron-ore prices gained for a sixth straight year and the cost of coking coal surged to records. The Brazil deal comes two weeks after ArcelorMittal said it plans to invest $1.6 billion in the country to increase steel production there by two-thirds.

The steelmaker will acquire London Mining Brasil, which is located in the state of Minas Gerais and explores for and produces iron ore. London Mining, based in the U.K. capital, acquired the Brazilian operations in May 2007, it said in a statement.

``The transaction exceeds that which could have been delivered by retaining the asset to full production or selling only part of the share capital,'' it said.

About $427 million from the sale will be returned to London Mining shareholders. London Mining rose 9.5 kroner, or 34 percent, to 37.5 kroner as of 9:21 a.m. in Oslo trading.

The company said May 7 that iron-ore resources at its mine in Brazil were 598.8 million tons, compared with a previous estimate of 266.3 million tons. London Mining's shares were suspended from trading in Oslo on Aug. 18.

To contact the reporter on this story: Mark Herlihy in London at mherlihy1@bloomberg.net.

Last Updated: August 20, 2008 03:23 EDT