UPDATE 1-China Metallurgical to buy Australia iron mine

(Recasts, adds details, chairman quote, updates shares)

SYDNEY, Feb 26 (Reuters) - China Metallurgical Corp has agreed to pay $370 million for a yet-to-be-developed iron ore mine in Australia, the latest move by a state-run conglomerate to acquire assets in Australia's booming resources sector.

Massive industrialisation has sent Beijing-controlled companies scouring abroad for raw materials such as iron ore, nickel and coal to supplement limited supplies at home.

Under direct supervision of the government, China Metallurgical has more than 70 subsidiaries, including about 20 overseas companies worldwide.

Rapid expansion in China's steel industry, now the world's biggest, has made iron ore a highly prized commodity among Beijing's central planners, particularly ore from Australia due to the relatively short shipping time to home ports compared with the mammoth deposits of Brazil and Africa.

China's hunger for imported ore has taxed the limits of Australia's two big iron ore miners, BHP Billiton Ltd/Plc (BHP.AX: Quote, Profile, Research, Stock Buzz) and Rio Tinto Ltd/Plc <RIO.AX(RIO.L: Quote, Profile, Research, Stock Buzz). Besides China, both companies have long been big suppliers to Japan, South Korea and elsewhere in Asia.

BHP Chief Executive Marius Kloppers has used the need to mine more iron ore as a reason for launching the world's second largest takeover attempt for Rio.

Rio has rejected the offer as too cheap, mainly because of its growth potential in iron ore mining.

Another Chinese multinational, Chinalco earlier this month teamed with U.S. aluminium producer Alcoa (AA.N: Quote, Profile, Research, Stock Buzz) to buy 9 percent of Rio.