Reuters reported that Brazil is considering a tax of up to 5% on iron exports, amid growing tension between the government and mining giant Vale the world's largest iron ore producer.

O Globo newspaper reported that the ministries of Finance and Industry have for two months been discussing the 5% export tax.

It reported that this would be an alternative to an increase in mining royalties that Mining and Energy Minister Mr Edison Lobao has tentatively proposed.

Vale has faced harsh criticism in recent months from government leaders, including President Mr Luiz Inacio Lula da Silva, for not investing enough in Brazil, with growing speculation the government is seeking a management shake up . O Globo earlier in the week reported that Mr Lula told top advisors to pressure for the removal of Vale CEO Mr Roger Agnelli.

Vale, a former state-owned company privatized in the 1990s, is run by a partnership between Brazilian Bank Bradesco, Japanese trading house Mitsui and a consortium of Brazilian pension funds.