UPDATE 2-Nippon Steel group to invest $8.4 bln in Brazil

(Recasts throughout with company, analyst comments)

By Yuko Inoue

TOKYO, Aug 9 (Reuters) - Nippon Steel Corp. (5401.T: Quote, Profile, Research, Stock Buzz) unveiled an $8.4 billion capacity expansion plan at its Brazilian affiliate Usiminas (USIM5.SA: Quote, Profile, Research, Stock Buzz) on Thursday as the world's No.2 steel maker shifted gears to growth to narrow the gap with Arcelor Mittal CELR.PA (ISPA.AS: Quote, Profile, Research, Stock Buzz).

The aggressive investment plan, which calls for building two new blast furnaces and boosting crude steel output by at least a quarter by the early 2010s, would put Nippon Steel ahead of a pack of rivals planning to move into Brazil, analysts say.

"That's a huge investment. That would make rivals like POSCO, Bao Steel and Arcelor Mittal who are considering a small mill in Brazil to have second thoughts about their plans," said Takashi Murata, analyst at Daiwa Institute of Research.

Nippon Steel said its 23 percent-owned affiliate Usiminas, or Usina Siderurgica do Minas Gerais SA, will shell out $5.7 billion to build a new blast furnace and expand existing capacities of hot rolled steel, thick plate, thin plate and galvanizing lines by 2011.

Total crude steel output will be lifted to 11 million tonnes a year, up from the current 8.8 million tonnes.

Usiminas separately plans a $2.7 billion outlay to build another blast furnace and a 3 million-tonne-a year steel plant. The plant will likely be built in the early 2010s, but details have not been decided, the company said.

Usiminas is to finance the deal using its own cash and loans.