Brazil's state-led oil company Petrobras will buy a fertilizer plant from mining giant Vale for $234 million, the companies announced.

The purchase of the Araucária Nitrogenados plant in Parana state will be paid for with revenues from Petrobras mining rights leased to Vale in Sergipe state, the statement said.

Both Petrobras and Vale, the world's largest iron ore miner, are scrambling to reduce costs and increase their cash flow to pay for ambitious expansion programs.

The Brazilian government has been pushing the companies to expand and restructure their fertilizer investments to help Brazil's massive agricultural export industry, which depends largely on imported fertilizers.

The purchase will lead Petrobras to give up existing revenues from mining rights despite deepening debt woes that saw Moody's Investors Service put the company on watch on Monday for a possible debt downgrade.