The Brazilian Government may take a “golden” blocking share in Vale, the Brazilian mining group, to protect national interests should the company succeed in a $90billion (£46billion) takeover of Xstrata.

An acquisition of Xstrata has become a topic of intense political debate in Brazil, as members of the Government express concern that Brazilian ownership of Vale, formerly CVRD, would be diluted.

One of the leading opponents of an Xstrata deal is thought to be Dilma Rousseff, chief of staff to President da Silva and a former Marxist guerrilla who was tortured by Brazil's military government in the 1970s.

A possible solution to the problem of control would be for the Government to take a golden share in Vale, which would give it pre-emptive rights over other shareholders and a block on any attempt to transfer assets into foreign hands.

The Government controls Vale, the world's third-largest mining group, through a 53 per cent holding owned by state pension funds and a development bank. A deal with Xstrata would introduce Glencore, the Swiss commodities trader, on to the share register and reduce the Brazilian Government's control below 50 per cent.

Glencore, which owns 35 per cent of Xstrata, is thought to want to keep shares in the enlarged group and is negotiating with Vale about the premium that it would receive.

Vale is understood to have raised about $50billion in financing to fund a deal expected to be worth £42 to £45 a share. Banking sources have said that they expect the terms of a deal to be completed soon, possibly as early as next week.

However, progress on a deal could be derailed by the Brazilian Government. Ms Rousseff is opposed to the deal and is rumoured to be President da Silva's choice to succeed him when his term ends in 2010.

Ms Rousseff is an economist by training and her government experience at state and later federal level has largely been in the energy and mining sector. She was Minister for Mining and Energy from 2003 to 2005, when she took over her present post. She is said to be concerned that the planned Xstrata deal would dilute Brazilian control of Vale and direct its investments away from Brazil.

Born into a middle-class family in 1947, Ms Rousseff joined the Marxist guerrillas who fought against Brazil's military regime in the 1960s. After being captured in 1970, she was held for several years, during which time she was tortured.

Often portrayed as the leading member of the Government's Left wing, Ms Rousseff has been a critic in the past of the administration's strictly orthodox fiscal policy and has argued for a smaller fiscal surplus in order to boost government spending.

She is in charge of Brazil's Programme for Accelerated Growth, which involves the Government spending billions of dollars on updating the country's dilapidated infrastructure.

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