The chief executive of ArcelorMittal (MT), the world's largest steelmaker, said the suspension of its Brazilian steel expansion projects is temporary and more a reflection of slower-than-expected Brazilian steel demand growth than a change in the company's Brazilian investment strategy.

"Brazil continues to be [the] most important business for us," Lakshmi Mittal told analysts ins a conference call Thursday. "Our suspension of [the] Monlevade project we believe is temporary," he added.

The Luxembourg-based steelmaker on Thursday announced that it has put on hold expansion plans for its long-products Joao Monlevade steel plant in Minas Gerais and its flat-products Vega Do Sul steel plant in Santa Catarina.

The suspension reflects ArcelorMittal's desire to calibrate its steel growth projects to evolving demand situations. As a result the steelmaker lowered its 2011 capital-expenditure plan to around $5 billion from $5.5 billion after suspending the Monlevade project, Chief Financial Officer Aditya Mittal said Thursday.

"The money on infrastructure is not being spent as much as expected," CEO Mittal said. "We would have to resort to higher exports which doesn't create value for us" if the expansion plan on Monlevade were to be completed in 2012.

"We are waiting for the Brazilian economy to accelerate again" to restart the project, he added.

ArcelorMittal was planning to increase Monlevade's wire rod production by boosting the plant's finished products capacity by 1.15 million metric tons a year.

ArcelorMittal has also suspended its plans to increase Vega Do Sul's hot dipped galvanized steel production capacity by 0.6 million tons a year and cold rolling steel production capacity by 0.7 million tons a year. The expansion was due to be completed in 2014.

Aditya Mittal said the steelmaker will continue to invest in maintenance capital expenditure, which is forecast at about $3 billion for 2011. It will also continue to invest in its mining operations where its sees more attractive growth returns, he added.

The steelmaker expects to spend roughly the same amount or less on capital expenditure in 2012 as in 2011, CFO Mittal said.

"Our core projects are not dependent on strong economic conditions to" deliver return to shareholders, Lakshmi Mittal said. They're "transcendent [of] near-term market uncertainties," he added.

-By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328; alex.macdonald@dowjones.com

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