UPDATE 2-Evraz in Australian iron ore pact with China's MCC

(Adds comments by Evraz, analysts; more details)

By Robin Paxton and James Regan

MOSCOW/SYDNEY, July 31 (Reuters) - Russian steel maker Evraz Group (HK1q.L) has joined forces with China Metallurgical Group Corp (MCC) to gain access to Australia's vast iron ore reserves and supply Chinese steel mills hungry for the key raw material.

Evraz, part-owned by billionaire Roman Abramovich, said on Thursday it would own 75 percent of a joint venture to develop the Cape Lambert Iron Ore project in Western Australia. MCC will own a quarter of the project, which will ship its ore to China.

"Given Chinese demand for the raw materials used in steel production is expected to remain very strong, having something in Australia seems like the right move," said Vladimir Zhukov, senior mining analyst for Lehman Brothers in Moscow.

Global prices for iron ore, a crucial ingredient in steel, have quadrupled in the last five years as China -- producer of a third of the world's steel -- devours ever more raw materials.

Benchmark prices set by leading miners BHP Billiton (BHP.AX) (BLT.L) and Rio Tinto (RIO.AX) (RIO.L) with Chinese buyers rose as much as 96.5 percent this year, the highest jump in a decade.

Evraz said in a statement MCC would be entitled to sign an offtake agreement for up to 60 percent of the iron ore produced.

Evraz said the Cape Lambert project would be able to produce 15 million tonnes a year of magnetite concentrate. It said the project was in the feasibility stage, but gave no time frame for the start of production or the cost of developing the project.