Anshan Iron & Steel Group, one of China's top steel mills, will buy a 12.94 percent stake in Australian iron ore producer Gindalbie Metals Ltd for A$39 million ($32.54 million).

Gindalbie said last week in a statement to the Australian Stock Exchange that it would issue 65 million shares to Anshan's investment arm in Hong Kong, Angang Group Hong Kong Co Ltd.

Anshan, based in northeastern China, will be the second-biggest shareholder of the Perth-based iron ore firm through the deal.

The money will be invested in the two parties' joint iron ore operations in western Australia.

The deal is the latest move taken by a Chinese steel maker pursuing iron ore abroad to feed the strong domestic demand fueled by China's booming steel sector.