Vale's biggest holder urges steel ventures-report

SAO PAULO Oct 27 (Reuters) - Vale (VALE5.SA)(VALE.N), the world's largest iron-ore miner, should boost investments in Brazil's steel industry to prepare for soaring demand in the long term, the company's biggest shareholder told Valor Economico newspaper in an interview on Tuesday.

"You can't decide on investments for the steel industry based on consumption today," said Sergio Rosa, chairman of Vale and president of Previ, the state-run pension fund that is the mining company's biggest shareholder.

"If we believe that Brazil will have a strong oil industry, demanding investments in platforms, ships, heavy investments in infrastructure, we will need steel," Rosa added. "The outlook for steel consumption today is not the same as that for the coming years."

Vale is under pressure by the Brazilian government to funnel more money into steel ventures to stoke the economy and create more jobs. But the Rio de Janeiro-based company wants to stay as a minority shareholder in such projects to avoid competing with top clients in the steel industry that buy its iron ore. [ID:nN19382681]

Vale, a former state company, became a target of harsh government criticism in recent months following efforts by Chief Executive Roger Agnelli to cushion the company from the impact of the global economic slump.

The company has since announced billions of reais in new investments, including a $3.7 billion mill in the northern state of Para in August.

Previ is not in negotiations to sell a portion of its stake in Vale, even as it has to reduce equity investments in its portfolio by 2014 to meet pension fund regulations, Rosa told Valor.

The fund might invest abroad, taking advantage of the new regulations, Valor quoted Rosa as saying. Any decision will be made during 2010, he told the newspaper.

Previ is the pension fund for employees of Banco do Brasil (BBAS3.SA), Brazil's biggest bank by assets, and owns the largest equity portfolio in the country. Previ's equity holdings were valued at 130 billion reais ($76 billion) this year, according to Valor. ($1= 1.716 reais) (Reporting by Guillermo Parra-Bernal; Editing by John Picinich)