Arcelor Mittal, the world's largest steelmaker, has bought the Brazilian iron ore assets from Anglo-African miner Lonmin for $810m (£435.2m).
The purchase comes as the firm seeks to secure access to raw materials in the face of soaring costs.
It wants to generate 75% of its iron ore supply by 2012 - up from the current level of 45%.
Arcelor Mittal said it would consider investing an additional $700m into expanding production in the region.
"The acquisition of London Mining Brasil ensures that our iron ore base is further diversified in the face of tighter supply for raw materials," said Arcelor Mittal's chief financial officer Aditya Mittal.
Anglo-African miner Lonmin said it had initiated a review of its Brazilian business, which it bought in May last year for $89m, after a number of expressions of interest.
It said it aimed to return about $427m of the proceeds from the sale to its shareholders, while the rest will be used to pay back debt and for the development of new and existing projects.
"We trust that investors will start to fully recognise our other iron ore and coal assets, as well as the strength of our management and technical teams," said Lonmin's managing director Christopher Brown.
Commodity prices, including iron ore, have rocketed on rampant demand to feed China's booming economy.
This has sparked concern that profits at firms which depend on these raw materials to do business, such as steelmakers, could suffer.
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