Brazil's President Luiz Inacio Lula da Silva said on Wednesday that he will tell Iran's President Mahmoud Ahmadinejad the Islamic Republic would suffer the consequences if it seeks nuclear arms.

Lula is due to visit Tehran next month.

"I will go there and talk face-to-face to Ahmadinejad. If he says he will build (arms), he'll have to pay the price for his move," Lula said at a steel conference in Sao Paulo without giving details.

Latin America's largest economy has urged continued dialogue with Iran even as Western powers push for a new round of U.N. sanctions over a nuclear program they believe is aimed at developing nuclear bombs.

Lula said Iran should not be punished before further talks and that he didn't want a repeat of what happened in Iraq, which was accused of having arms of mass destruction "that nobody showed us."

The Lula administration said this week it was looking to finance Brazilian exports to Iran, particularly food supplies.

Lula welcomed his Iranian counterpart to Brazil last year and will visit Tehran despite growing criticism by Brazilian opposition parties and Western diplomats over the close ties.

Brazil's Foreign Minister Celso Amorim said last week that United Nations sanctions against Iran over its nuclear program could make the Islamic Republic more radical and cause its population to revolt. But he denied Brazil was pro-Iran, saying it simply favored negotiated solutions to global problems.

(Reporting by Carmen Munari; Writing by Raymond Colitt, editing by Cynthia Osterman)