Jan. 17 (Bloomberg) -- Anglo American Plc, the world's second-largest mining company, offered $5.5 billion for two iron-ore mines controlled by Brazilian billionaire Eike Batista, tripling production as prices rise to records.

Anglo plans to acquire the mines from Rio de Janeiro-based MMX Mineracao e Metalicos SA, which is 60 percent owned by Batista. MMX's remaining shareholders would also receive a payment of $361.25 a share, London-based Anglo said today in a statement.

Anglo Chief Executive Officer Cynthia Carroll spent more than $4 billion on acquisitions since she took over in March to increase production of industrial metals, which are rising faster than gold and diamonds. Anglo's biggest rivals in iron ore, BHP Billiton Ltd., Rio Tinto Group and Cia. Vale do Rio Doce control more than 70 percent of the raw material, the price of which has risen threefold in the past five years.

``It just shows again how aggressive they are, which had been signaled by Cynthia Carroll at the outset,'' Patrice Russo, who helps manage the equivalent of $51 billion including Anglo shares at Sanlam Investment Management in Cape Town, said in an interview. ``They definitely see themselves as growing and not being acquired.''

Minas-Rio Project

Anglo fell 110 pence, or 4.1 percent, to 2,603 pence at the close on the London Stock Exchange, valuing the company at 34.4 billion pounds ($68 billion). The stock has risen 8.3 percent over the past year, while BHP advanced 52 percent. MMX rose as much as 80 reais, or 9.3 percent, to 940 reais in Sao Paulo, and was at 850 reais as of 3:11 p.m. local time. The shares closed at a record 975 reais on Dec. 11.

The acquisition would give Anglo the 51 percent stake it doesn't already own in Minas-Rio, a Brazilian mining project that's expected to produce 26.5 million metric tons a year of iron ore. MMX will also transfer its 70 percent of the Amapa iron-ore mine in northern Brazil to the new company. Cleveland- based Cleveland-Cliffs Inc. owns the other 30 percent of Amapa.

``With resource companies making acquisitions at the top of the cycle it's very hard not to overpay,'' said Wayne McCurrie, who helps manage the equivalent of $12 billion at Momentum Group Ltd. in Johannesburg including Anglo shares. ``We are at the very top.''

The acquisition would underscore Anglo's strategy to cut its dependence on precious metals and focus on industrial commodities needed by China, the fastest-growing major economy.

Seaborne Trade

In August, Anglo agreed to spend $1.43 billion to develop the Pebble copper deposit in Alaska in a venture with Northern Dynasty Minerals Ltd. In November, it announced a $1.7 billion expansion of its Los Bronces copper mine in Chile, and in June paid $400 million for the right to develop the Michiquillay copper deposit in Peru.

The MMX assets will help Anglo to boost its seaborne iron- ore output to 150 million tons by 2017, Carroll said today in the statement. Anglo owns 65 percent of Kumba Iron Ore Ltd., Africa's largest iron-ore producer.

Global production of iron ore was about 1.5 billion tons in 2006, 730 million tons of which was exported by sea, according to the United Nations. Rio is studying an increase in its capacity to 320 million tons by 2012, compared with the 220 million tons it expects to produce next year.

A new company, in which Batista currently has a 64 percent stake, will be demerged from MMX and acquired by Anglo. Before the acquisition, MMX said it will spin off the new company and its logistics unit, LLX Logisticas. Current MMX investors will receive one share of both LLX and the new company for every MMX share they own.

Price Gain

In April, Anglo paid MMX and Centennial Asset Mining Fund LLC, an investment fund owned by Batista, $1.15 billion for 49 percent of the Minas-Rio project. The first phase of the mine is expected to cost $2.35 billion, Anglo said at the time.

Benchmark contract iron-ore prices may rise by as much as 70 percent for the year starting April 1 because of a global supply deficit, Credit Suisse Group analysts led by Roger Downey said in a report yesterday. Downey raised his official price forecast to a 55 percent gain, from 35 percent.

MMX has hired Credit Suisse as an adviser, the mining company said in a statement to Brazil's securities regulator.

To contact the reporters on this story: Brett Foley in London at bfoley8@bloomberg.net; Antony Sguazzin in Johannesburg asguazzin@bloomberg.net;

Last Updated: January 17, 2008 12:45 EST