UPDATE 1-Petrobras pays $84 mln for stake in ethanol mill

* Petrobras buys minority stake in ethanol mill, pays $84 mln

* With Petrobras input, mill capacity to double to 203,000 cubic meters (Adds details)

SAO PAULO Dec 22 (Reuters) - Brazil's state-controlled energy firm Petrobras (PETR4.SA)(PBR.N) bought a 40.4 percent stake in a mill that produces ethanol biofuel from sugar cane, the company said on Tuesday in a filing with the local securities market regulator.

Petrobras paid 150 million reais ($84 million) for the share in the Total Agroindustria Canavieira mill located in Bambui in the state of Minas Gerais.

The mill's productive capacity will be more than doubled to 203,000 cubic meters and 38.5 MW of excess energy produced on site by burning cane bagasse which is left over after the cane is crushed, will also be available to sell.

In Petrobras's investment plan, currently being revised, the company said it intended to invest $2.4 billion in biofuels by 2013, with a target of producing 3.9 billion liters by that time.

The announcement comes less than one month after Petrobras backed out of an ethanol project in partnership with trading house Mitsui (8031.T).

Cane-derived ethanol biofuel has become big business in Brazil since the arrival of flex-fuel cars in 2003 which can run solely on ethanol or gasoline or any mixture of both. Almost all new cars sold in Brazil have the flex technology. (Reporting by Roberto Samora; Editing by Christian Wiessner)