MercoPress. South Atlantic News Agency

World’s biggest iron ore producer under pressure to invest in steel industry

Brazilian tycoon Batista seems to be playing the same tune as President Lula da Silva

Brazilian billionaire Eike Batista said he may be interested in acquiring a stake in the world’s biggest iron-ore producer Vale do Rio Doce, after one of the company’s shareholders said he showed “interest” in buying its stock.

“We have cash, we have resources and if we have space, it will happen,” Batista told reporters in New York when asked about his interest in Vale. He declined to comment further on any talks he was having about acquiring Vale shares.

The announcement seems to be in line with Brazilian government pressure on Vale to invest more in Brazilian industries such as steel than in simply exporting iron ore.

Bradespar SA, a holding unit of Banco Bradesco SA said in a regulatory filing late that Batista showed “interest” in acquiring the company’s indirect stake in Vale. Bradespar said it didn’t “consider or accept” the offer.

Bradespar holds 21% of voting shares of Valepar SA, which owns more than half of Vale’s voting capital.

Batista is also interested in acquiring the stake that Previ, Latin America’s largest pension fund, holds in Vale, Brazilian newspaper Valor reported Monday, without saying where it got the information.

Batista ha repeatedly echoed comments by President Lula da Silva that Vale should build steel mills in Brazil to generate more jobs within the country.

“I dare to say steel production in Brazil can be the cheapest in the world,” Batista said.

Previ, the pension fund of state-controlled Banco do Brasil SA, is the majority shareholder in Valepar. The government also holds 6.9% of Vale’s voting capital via state-controlled development bank BNDES.

The interest of Mr. Batista coincides with the announcement from Vale that it had agreed with Germany’s Thyssen-Krupp Steel to increase its stake in steelmaker Siderurgica do Atlantico, CSA, to 27% from 10%. The operation involved 1.4 billion US dollars.

CSA, a project in Rio de Janeiro state that will turn out 5 million tons of steel slabs per year, is expected to come online in the first half of 2010 and its iron ore feedstock will be supplied exclusively by Vale.

The plant would be the first large steel mill built in the country since the mid-1980s and Vale said it would be the largest industrial investment the Latinamerican country has seen for a decade.