Oct. 15 (Bloomberg) -- Brazilian Budget Minister Paulo Bernardo said the government doesn’t plan to interfere in the day-to-day management of Vale SA, the world’s biggest iron-ore producer.

Speaking to reporters in Brasilia, Bernardo said he sees “no signs” that President Luiz Inacio Lula da Silva wants to get involved in Vale’s operations. The government is only urging the company to invest more in steel projects in Brazil, Bernardo said.

Lula has publicly pressed Vale to build steelworks at least half a dozen times since April. Mines and Energy Minister Edison Lobao also proposed that Vale pay more royalties. In addition, Lula urged the Rio de Janeiro-based company on Sept. 11 to buy Brazilian-made vessels to transport ore exports to international markets, such as China.

“I see much passion on this matter in some media reports, but I don’t see any signs that president Lula wants to interfere in Vale’s daily operations,” Bernardo said. “What the president has been saying is that we have to have more investment in steel production in the country.”

O Globo newspaper reported yesterday that Lula had authorized state-company pension funds and Cabinet Chief Dilma Rousseff to put pressure on Vale to process more of its ore in Brazil.

Pension Fund Influence

The retirement funds for state-controlled Banco do Brasil SA, Petroleo Brasileiro SA and Caixa Economica Federal own 49 percent of Vale majority shareholder Valepar SA through holding company Litel Participacoes SA, according to regulatory filings. On Aug. 1, news magazine Veja said Lula asked his officials to seek a way for the government to take control of Vale’s board. Veja didn’t say where it obtained the information.

“I’m not irritated with Vale,” Lula said in an interview with Brazilian financial daily Valor Economico published Sept. 16. “I’ve insisted, systematically, that Vale builds steelworks in Brazil. Vale can no longer afford the luxury of just being an iron-ore exporter.”

Bernardo said Lula met with Vale’s Chief Executive Officer Roger Agnelli about a month ago. He didn’t elaborate on the meeting. Lula has a “permanent dialogue with Agnelli,” Bernardo said.

Vale’s voting shares rose 0.8 percent to 45.65 reais ($26.70) at 11:18 a.m. New York time in Sao Paulo trading today.

To contact the reporter on this story: Iuri Dantas in Brasilia Newsroom at idantas@bloomberg.net

Last Updated: October 15, 2009 12:31 EDT