Mines and energy minister, Edison Lobao, said the Brazilian government wants mining giant Vale SA (VALE) to become a large steelmaker in order to compete with ArcelorMittal (MT), the Valor newspaper reported Wednesday.

"Vale, the largest producer of iron ore in the world, needs to open the way for Brazil to become a large exporter of rolled steel," Lobao said.

Lobao's views were in line with Luciano Coutinho, president of Brazil's Development Bank, BNDES, who suggested Monday that the country's steel sector should consolidate in order to compete more effectively abroad.

According to Valor, Coutinho is the main formulator of development policy for President Luis Inacio Lula da Silva's left-of-center government.

Lula recently admonished Vale for not adding more value to its iron ore in Brazil and said he did not want potential jobs in steelmaking to be exported.

Vale is developing four new steel mill projects in Brazil with foreign partners.

The first, a partnership with ThyssenKrupp (TKA.AE), is scheduled to start up at the end of this year.

-By John Kolodziejski, Dow Jones Newswires; 55-21-2586-6086; John.Kolodziejski@dowjones.com