Vale, the Brazilian mining group that is the world’s biggest producer of iron ore, is to invest $12.9bn (£7.9bn) during 2010 in what is being seen as an attempt to end a simmering disagreement with the government over its investment strategy.

But the plan, announced late on Monday after a meeting between Luiz Inácio Lula da Silva, Brazil’s president, and Vale’s controlling shareholders and senior management, falls short of the heavy investments in steelmaking the government has demanded in recent months.