ENRC pays $300 mln for 50 pct Brazil iron ore stake

LONDON, May 1 (Reuters) - Kazakh mining group ENRC (ENRC.L) paid $300 million for a 50 percent stake in a Brazilian firm developing an iron ore deposit, ENRC said on Thursday, in its first foray outside eastern Europe.

Eurasian Natural Resources Corporation Plc, already the world's sixth-biggest iron ore exporter by volume, said the project being developed by Bahia Mineracao Limitada (BML) was expected to produce more than 20 million tonnes of concentrate a year.

ENRC said it bought the stake from Zamin BM NV for $300 million in cash by exercising an option.

BML was developing an infrastructure plan and had already arranged for contractors to develop the project located in the Bahia state.

First output was envisaged for 2011 with full production by the following year, a spokesman said.

ENRC produces 17 million tonnes of iron ore concentrate annually, he added.

"We are excited by the prospects and the fundamentals of the iron ore industry. With this outlook we particularly welcome the opportunity to acquire an interest in BML," Chief Executive Johannes Sittard said in the statement.

In recent contract talks, the world's biggest iron ore producer Vale (VALE5.SA) of Brazil agreed price hikes of 65-71 percent with steelmakers.

ENRC, also the world's biggest ferrochrome producer, said last month it held informal merger talks with rival Kazakhmys (KAZ.L), but it must submit a formal bid by May 16 or walk away for six months under a ruling by the UK Takeover Panel. (Reporting by Eric Onstad; Editing by Erica Billingham)