Mining company Vale SA, in Brazil According to Brazil's most respected weekly magazine, Veja, the President of Brazil, Luiz Inácio Lula da Silva, wants the government to take control of mining giant multinational Vale SA, formerly known as Companhia Vale do Rio Doce (CVRD).

    Allegedly Lula asked officials inside his government to find a legal way to ensure the government controls Vale through Previ and BNDES Participações SA, the investment arm of Brazil's state development bank, the São Paulo-based Veja said.

    Vale is the world's biggest iron-ore producer. Lula considered job cuts and trims to the company's investment plans, which were carried out by Chief Executive Officer Roger Agnelli, as unnecessary, the magazine said. Created in 1942 by the Brazilian government, Vale was privatized in 1997.

    Valepar SA, the company that controls Vale, is owned by Previ, the employee pension fund of state-controlled Banco do Brasil SA; Bradespar SA, an industrial holding company; Mitsui & Co, Japan's second-largest trading company; and BNDES Participações SA.

    Vale announced this week that second-quarter profits tumbled 84% versus the year earlier period as lower iron ore production and prices pushed earnings to around half of what analysts had projected.

    Demand for iron ore remained weak during the quarter as the global economy struggled to recover from the 2008 financial meltdown, lumbering Vale with lower prices for its main product and fewer places to sell it.

    Vale, the world's biggest iron ore producer, posted net profits of US$ 790 million compared with US$ 5.01 billion at the height of the commodities boom a year earlier, reflecting the effects of the financial crisis.

    In related news, Vale reported on Friday the discovery of hydrocarbons in an exploratory block off Brazil's south-eastern coast. The hydrocarbons were located in the Vampira exploration well in the Santos Basin, Vale said.

    The mining company said traces of light oil and natural gas were found in the Vampira well and that the exact volume will known after further tests. Last May the company announced the discovery of natural gas in the Panoramix well, also in the same exploratory block.

    Vale has a 12.5% participation in the block's exploration consortium. Brazil's giant Petrobras has 35%, while Spain's Repsol, the block's operator, has 40% and Australia's Woodside has 12.5%.

    Mercopress

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    • Steven

      Go Lula!

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