Brazil gov’t studying iron ore export tax–report

* Measure seeks more investments in domestic steel plants

* Comes as Vale is choosing new CEO under gov’t pressure

SAO PAULO, April 1 (Reuters) – Brazil’s government is considering
creating an iron ore export tax meant to spur investment in local steel
production, a Brazilian newspaper reported on Friday.

The news comes as Brazilian mining giant Vale (VALE5.SA: Quote, Profile, Research) 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. [ID:nN31285411]

Advisors to President Dilma 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 S.Paulo reported on Friday, citing a source in
the presidential palace.

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

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
(Reporting by Brian Ellsworth)

Brazil gov’t studying iron ore export tax–report