Friday, 11 September 2009

Pres. Lula says Vale should buy Brazilian ships

BRASILIA, Sept 11 (Reuters) - Brazilian President Luiz Inacio Lula da Silva has called on the country's iron ore miner Vale, the world's largest, to favor local industry in the purchase of large items such as ships to create more jobs in the South American country.

Lula has publicly criticized the firm, one of Brazil's flagship companies, on several occasions in recent weeks. In the past, Lula has called on Vale to establish steel mills to refine the iron ore it mines locally to increase employment for the country's 190 million residents.

"It's impossible that Vale do Rio Doce should continue buying ships in China when we are setting up a naval industry here," Lula said at the christening of a new ship built at a shipyard in Pernambuco in the country's northeast.

Vale last year placed a $1.6 billion order for a dozen of the largest class of ore carriers from a Chinese shipbuilder Jiangsu Rongsheng Heavy Industries Co Ltd. The ships, for delivery in 2011 and 2012, can each hold 400,000 tonnes.

Lula did not explicitly call on Vale to back out of this contract but dismissed the firm's argument Brazil could not provide these ships, saying local shipbuilder Atlantico Sul was now able to make vessels to this specification.

"They said they are ready and made the commitment that next week there would be a meeting between Atlantico Sul, (Vale Chief Executive Officer) Roger Agnelli and the naval industry to find out if it is possible, because I told comrade Roger we need to think about Brazil," Lula said.

Lula is approaching the end of his second mandate and cannot run for a third under constitutional rules. Instead he is focusing on propping up his preferred candidate, chief of staff and fellow Labor Party member, Dilma Rousseff.

Lula will also be under pressure to show he has tried to make good on an election campaign promise to create millions of jobs in the country whose increasing wealth still flows mainly to a small portion of the population.

Local newspapers have been reporting that Lula's government has been pressuring Vale to invest more in Brazilian industries such as steel and may have even tried to thwart Vale's reported bid for fertilizer giant Mosaic.

Vale's position in the past has been that they are not interested in getting into the steel sector where they would essentially be competing with their clients.

(Reporting by Fernando Exman; writing by Peter Murphy; editing by Reese Ewing and Lisa Shumaker)

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