MercoPress. South Atlantic News Agency

Vale’s CEO, first victim of Brazil’s policy to cut reliance on commodities exports

CEO Roger Agnelli transformed a former government company into a leading world corporation

Brazil's government is considering creating an iron ore export tax meant to spur investment in local steel production, a leading Brazilian newspaper reported on Friday. The measure is in the framework of President Dilma Rousseff’s intention of cutting Brazil’s reliance on non processed commodities exporter.

Advisors to President Rousseff have asked the Finance ministry to study a measure that would tax iron ore exports and exempt steel exports, the newspaper O Estado de Sao Paulo reported on Friday, citing a source in the presidential palace.

The Finance ministry rejected the report in a statement late on Friday. “The government is not undertaking any analysis on the subject. Nor has the president requested the finance ministry to study the issue,” the statement said.

The news comes as Brazilian mining giant Vale, (Latin America’s largest non government corporation) announced Friday it is seeking a replacement for chief executive Roger Agnelli under heavy government pressure following years of criticism that the company was not investing enough in steel.

Vale, the world's largest iron ore producer, said in a statement that its controlling shareholder group Valepar had hired an “international executive recruitment firm” to find a replacement for Agnelli, who has headed the company for a decade and whose term reportedly expires in May.

Vale said it was informed Thursday of the decision by Valepar, which was to hold shareholder meetings on April 4 and 7 to discuss and choose Agnelli's replacement. Three names were on a short-list for the position, and Agnelli “does not appear on the list,” according to company spokeswoman Patricia Malavez.

The Brazilian government holds 60.5% of Valepar, which in turn controls 53.5% of Vale shares. Bradesco another major shareholder allegedly was convinced by Minister Mantega to support Agnelli’s replacement.

The move's intent would be in part to boost pressure on Vale to finish building a steel mill in the state of Para, according to the report.

Vale has taken minority stakes in Brazilian steel projects as a way of attracting investment and boosting domestic demand for iron ore. But it does not want to become a major steel producer since this would leave it competing with its clients.

Brazil is seeking to expand domestic manufacturing to create jobs and reduce reliance on commodities exports, but its high operating costs have left many of its industries struggling to compete with products from China.

The daily Folha de Sao Paulo reported that Tito Martins, a veteran Vale executive who directs its base metals operations, is Agnelli's likely successor. In 2010, the group achieved the best results in the history of the global mining industry, with net profits of 17.3 billion US dollars.