June 9 (Bloomberg) -- Brazilian President Luiz Inacio Lula da Silva said oil companies are in a ``commercial war'' against Brazil's sugar-cane ethanol, rejecting accusations it causes deforestation and relies on slave-labor working conditions.

``I believe the main attacks against biofuels come from oil companies,'' Lula said today in his weekly national radio program broadcast. ``We are aware of the interests held by countries that don't produce ethanol or produce ethanol from wheat or corn, which aren't competitive.''

Brazil is the world's biggest grower of sugar cane and the biggest producer of sweetener and ethanol made from the tropical plant.

Amnesty International's 2008 global human rights report, published at the end of last month, says some Brazilian cane cutters work in conditions that are virtual slavery.

Lula said today working conditions in sugar cane plantations aren't ``more difficult'' than those in coal mines, which helped develop ``many European countries.''

He said the government is negotiating with business leaders a new working contract to improve conditions for cane cutters.

Lula also rebutted the accusation of some environmentalists that sugar cane spurs deforestation in the Amazon.

``We showed them the places used for sugar cane are thousands of kilometers away from the Amazon,'' he said, referring to Brazil's participation in the United Nations- sponsored Food Security Summit in Rome last week.

``To say sugar-cane is invading the Amazon is completely absurd,'' Lula said.

To contact the reporter on this story: Andre Soliani in Brasilia at at asoliani@bloomberg.net;

Last Updated: June 9, 2008 12:20 EDT