Professional Documents
Culture Documents
CHAPTER 1
Mining in the First Republic
1.1 All that glitters is not gold nationalist movements. The workers of Itabira created their own 0217
dialect, guinlagem de camaco (or “monkey language”),2 to avoid being
At the end of the 19th century – when prospectors had already understood by their foreign bosses. As time went by, the Itabira Iron
given up their search for gold in Minas Gerais and abandoned the Ore Co., which grew up around the Vitória-Minas Railroad, acquired
villages in the hills to look for work on the coast – the town of Itabira the profile of the men who ran it. Percival Farquhar – who is said to
was little more than Cauê Peak. Cauê was one of those places that have kept the first dollar he earned mounted in a frame next to his
nature seems to have sculpted by hand: a mountain that rose up bed, beside a photograph of his parents – was one of them.
suddenly from the surrounding plains, forming a unique feature. It Farquhar was a legendary figure, someone whose life seems like
is said that during full moons, the mountain used to shine as if lit something from a work of fiction. Some consider him a capitalist
up by floodlights hung from the sky. However, as we know, all that genius; others, an opportunist. Born in the city of York, Pennsylvania,
glitters is not gold. in the United States, he came to Brazil after working on railroad
The word Itabira is of Tupi origin, meaning rock (“ita”) that construction ventures in Latin America (including the unsuccessful
shines (“bira”).1 Contrary to the assumptions of the adventurers Madeira-Mamoré adventure in what is now the Brazilian state of
who arrived to dig at the foot of Cauê Peak (the shining rock Acre), and he acquired the Itabira Iron Ore Co. in 1919. The paths
itself) in search of gold, what made the mountain shine was its taken by the company – especially those that, using the railroad,
enormous quantity of iron. It was a reddish iron that spread out its would transport ore to the sea and to fortune – were always
color across the landscape, the layers of clay and the rivers in the intimately connected with Farquhar’s trajectory and personality.
surrounding area. The color would enter family homes and remain The businessman was the main actor in violent political battles
there, ingrained. At the turn of the 20th century, Cauê Peak was and, for better or worse, he was the target of nationalist campaigns
mapped as the biggest iron deposit in the world. The news spread concerning the right to extract ore in Brazil.
across the planet. The gold prospectors had left Itabira, but now The history of Companhia Vale do Rio Doce (CVRD), established
foreign miners started to appear. in 1942 from Farquhar’s Itabira Iron Ore Co., began slightly earlier,
The Itabira Iron Ore Company was the first company authorized and is intertwined with the history of mining in Brazil. It is a
to prospect for iron in the region. It was the successor to the history of dreams, adventure, politics, wealth, wars, laws and men.
Brazilian Hematite Syndicate and, over the course of its existence, A history that, as will become evident, was born in the shiny rocks
it witnessed various political upheavals, rises and falls in the of Cauê Peak.
international economy, changes in legislation and, above all,
1 - The name Itabira has two different interpretations. According to linguist Theodoro
Sampaio, it means rock that rises. However, in the book Voyages dans le provinces de Rio
de Janeiro et de Minas Gerais (Paris: Gibret et Darez, 1830, vol. 1, p. 270), by Auguste de
Saint-Hilaire, the name Itabira is said to come from the indigenous words “yta” and
“bera,” meaning rock that shines. According to Saint-Hilaire, “Therefore, Itabira does
not mean higher, sharp rock, as has been suggested.” See Sampaio, Theodoro. O Tupi na
geographia nacional. Instituto Historico e Geographico de S. Paulo. São Paulo: Typ. da Casa 2 - The words of “guinlagem de camaco” are made by swapping the first consonant or
Eclectica, 1901. Available at: <http://biblio.wdfiles.com/local--files/sampaio-1901-tupi/ group of consonants of the second syllable with the first letter of the first syllable. In this
sampaio_1901_tupi.pdf>. way, “linguagem” becomes “guinlagem” (or “guilagem”), and “macaco” becomes “camaco.”
1.2 Mining codes and codes of honor system, the mine owner was the owner of the land on which it was
located. This change, expressed in article 72, paragraph 17 of the
20 Understanding the history of mineral exploration in Brazil, more Constitutional Charter, sought to stimulate the free exploitation of 21
than anything else, means understanding the changes in legislation minerals by landowners.5
regulating the sector. Although mining activity has been a part of The minerals people were looking for were no longer gold and
the country’s history from the beginning, exclusive laws in the precious stones. Throughout Brazil – and especially in the state of
area are relatively recent. Changes started to have real influence Minas Gerais – there were clear signs that the so-called “age of gold”
on society at the end of the 19th century, with the proclamation had reached its end. Production of the metal, which in the mid-18th
of the Republic. It was the first republican Constitution, enacted century reached 300 metric tons per year, had fallen to a third of this
on February 24, 1891, that profoundly altered the subsoil property level less than 100 years afterwards. The number of people living
regime. Until then, Brazil had lived under laws largely created soon around the former gold mines was waning.6 However, there were still
after the Portuguese royal family arrived in the country. immense resources to be found beneath the ground. The technical and
At the start of the colonial period, in 1521, the Ordinances of scientific progress that marked the end of the 19th century, ushering
Manuel were enacted, giving the Portuguese Court possession of in what some historians have called the Second Industrial Revolution,7
“seams of gold or any other metal,” and guaranteeing the discoverer opened up new prospects for extracting and using various minerals.8
the right to mine upon payment of one-fifth (the so-called “quinto”) The discovery of new processes for transforming iron into steel
of the metals extracted, “after deducting all costs.” As of 1603, the had immediate consequences. Steel, an alloy of iron and carbon, and
Ordinances of Manuel were replaced with the Ordinances of Philip, more malleable than cast iron, was essential to the production of
which also granted the king ownership of mineral wealth (Book II, machines for new factories and girders for construction. Iron deposits
Chapter XXVI, Section 16).3 hitherto abandoned as uneconomic started to be exploited in Europe
Soon after independence (but before the Constitution of 1824), and the United States, and steel production grew at an extraordinary
the imperial government enacted a law, on October 20, 1823, pace. Used to make railroad tracks, the structures of large buildings,
validating “all Portuguese legislation prior to April 21, 1821, including in tunnels and bridges, and in machinery of all kinds, steel – the main
the provisions of Book II, Chapter 26, Section 16, Chapter 28 and product made from iron – became a basic industrial raw material.9
Chapter 34, Section 10 of the Ordinances of Philip, which stipulated,
among other things, that the king owned all underground mineral
5 - Concerning this subject, see Vivacqua, Attílio, A nova política do sub-solo e o regime legal
resources. Accordingly, the imperial period retained the property das minas.
system adopted in colonial times, through the Ordinances and the 6 - To consult the censuses, see the IBGE’s library at: <http://biblioteca.ibge.gov.
provisions enacted throughout the country by the Law of 1823, br/visualizacao/monografias/GEBIS%20-%20RJ/Recenseamento_do_Brazil_1872/
with the difference that mines and any other subsoil wealth now Provincia%20de%20Minas%20Geraes%201%20Parte.pdf>. In the country’s first census,
conducted in 1872, the total population of Ouro Preto was 17,701.
constituted the nation’s property”.4
7 - Concerning this subject, see Hobsbawn, Eric. As origens da Revolução Industrial. São
One innovation introduced by the 1891 Constitution was the Paulo: Global Editora, 1979; A Era do Capital, 1848-1875. Rio de Janeiro: Paz e Terra, 1996; Da
adoption of the United States system of accession. Through this Revolução Industrial inglesa ao imperialismo. Rio de Janeiro: Forense Universitária, 2003; and
Lima, Alceu Amoroso. A segunda Revolução Industrial. Rio de Janeiro: Agir, 1960.
8 - See Guimarães, José Epitácio Passos. Epítome da história da mineração. São Paulo: Art
Editora, 1981, pp. 102-120. First photograph of men
3 - O regime jurídico da mineração no Brasil. Available at: <www.ufpa.br/naea/pdf.php?id=147>. 9 - See Burns, Edward McNall. História da civilização ocidental. O drama da raça humana. Porto working inside a gold mine, in
4 - Idem. Alegre: Editora Globo, 1948, vol. 2, pp. 674-675. 1888, taken by Marc Ferrez.
In turn, technical advances in steelmaking stimulated the Campos and Antônio Olynto dos Santos Pires, all former students
mining of coal to make coke, widely used to reduce iron ores in blast of the Mining School.12
furnaces. Improvements to processes and techniques for extracting The results of the commission’s work – which put into concrete
coal enabled deeper seams to be mined and higher output. Other numbers what had until then been mere speculation – changed
minerals, such as copper, lead, zinc, bauxite and manganese, gained the way mineral policy was established in the country. Gonzaga de
many new uses and their production expanded.10 Campos, for example, estimated that there were around 3 billion
22 In various Brazilian states, important advances were made metric tons of iron ore reserves in the state of Minas Gerais. In terms 23
in the field of geological prospecting and surveying, enabling a of coal, earlier assessments about the feasibility of harnessing
significant increase in the number of mineral discoveries. It was in them were confirmed, and this encouraged the establishment of
this new context – in which scientific research became ever more companies interested in exploiting carbon deposits in the south
linked to economic progress – that the Ouro Preto Mining School of Brazil.
was established. 11 Interest in the country’s mineral reserves was further shaped
Founded in 1876, the School directly influenced the formulation by the creation, by means of Decree 6,323 of January 1907, of the
of Brazil’s mining policy at the start of the republican period. The Geological and Mineralogical Service of Brazil (SGMB), which was
School produced the first generations of Brazilian geologists, blast replaced in 1934 by the National Mineral Production Department
furnace designers and steelmaking industrialists. It was the right (DNPM). The SGMB, whose first director was Orville Derby, became the
moment. Brazil needed research and information in this area, and main instrument for geological and mineral studies in the country.13
this was provided by the School’s professors and alumni. They Right from the start, the focus of the SGMB’s research was iron.
also provided assistance to small iron prospectors and mining In its first year, the SGMB was tasked with conducting prospecting
companies interested in introducing technological changes to and economic studies concentrating on iron ore in the municipalities
boost productivity. of Conselheiro Lafaiete, Mariana, Itabira and Sabará in Minas Gerais.
Initially, the Mining School’s attentions focused on coal. Under These studies resulted in two maps showing the distribution of iron
the direction of geologist Luiz Felipe Gonzaga de Campos, the and manganese deposits in the Iron Quadrangle region. Above all, the
potential of the Santa Catarina carbon basin was evaluated, starting study revealed the existence of immense iron reserves of exceptional
in 1892. In 1906, the Minister of Transport and Public Works, Miguel quality in Itabira. This small town in Minas Gerais was now on the
Calmon, established the Geological Commission of Brazil. The geological and economic map of Brazil.
idea was to continue research already initiated and, in particular,
conduct studies on untapped minerals.
Led by Orville Derby, this commission divided the country
into three districts: the south region, with its notable carbon
reserves; the central region, known since the 18th century for gold
exploration; and the north region, whose potential was practically
unknown. The three regions were placed under the leadership,
respectively, of geologists Francisco de Paula Oliveira, Gonzaga de
10 - Idem, ib., p. 677. See also Vazquez de Prada, Valentin. História econômica mundial. Porto: 12 - See Chiarizia, Martha M. de Azevedo. Itabira Iron Ore Company Limited. Master’s thesis in
Livraria Civilização Editora, 1977/1978, vol. 2, pp. 211-214. History, Niterói, UFF, 1979, p. 4; and Soares e Silva, Edmundo de Macedo. O ferro na história e
The map shown above, drawn in India ink, a gift from 11 - See Guimarães, José Epitácio Passos, op. cit., pp. 102-103, who presents a list of the na economia do Brasil. Rio de Janeiro: Biblioteca do Sesquicentenário, no. 9, 1972, p. 49.
engineer João Victor Magalhães Gomes to the Emperor of mineral deposits existing in various regions of Brazil, produced by Itagyba Barçante, author 13 - For more information, see the Federal Senate, O governo presidencial do Brasil 1889-1930:
Brazil, Pedro II, given in 1881, reveals an itinerary featuring of Economia rural brasileira. Rio de Janeiro: Imprensa Nacional, 1946. See also Carvalho, José Guia administrativo do Poder Executivo no período da República Velha, p. 50. For comparison
gold and topaz mines, mineral deposits, and iron factories Murilo de. A Escola de Minas de Ouro Preto: o peso da glória. Rio de Janeiro: Finep/Cia. Editora purposes, the United States Geological Service was established In 1879, and the British
located around Ouro Preto in Minas Gerais. Nacional, 1978. Geological Service (BGS) was founded in 1835.
26 1.3 Setbacks in iron production Some of the iron was used to make horseshoes, hoes, sickles The federal government’s desire to encourage domestic iron 27
and axes, and some was sold in bars to neighboring municipalities. and steel production was expressed for the first time in a message however, there was no reliable information on the potential of
Although many studies and surveys revealed or confirmed There were also many foundries spread across various parts of the sent by President Nilo Peçanha in 1909 to the National Congress: these deposits.21
the existence of large iron ore deposits in Brazil, it took some country. A common feature of the overwhelming majority of these “Nothing could better meet this need than iron. Nationalizing the As a result of the congress, then, large companies from England,
time before there were any significant advances in exploiting establishments was the use of imported raw materials.17 The only production of this metal is also a necessary condition for the growth the United States, Germany, Belgium and France, in particular,
them. Various factors explain the limited development of iron two operations to produce pig iron on an industrial scale before and consolidation of the military, no less than for the expansion of obtained official knowledge of Brazil’s reserves, calculated at
ore extraction and the late establishment of steelmaking on an the 1920s were the Esperança Plant and the Companhia Siderúrgica civil industry.”19 10 billion metric tons, and this triggered a race to harness the
industrial scale in the country. Mineira, established in 1888 and 1917, respectively.18 Shortly afterwards, Decree 8,019 of May 19, 1910 granted favors country’s iron ore. Taking advantage of gaps in the first republican
Known reserves of iron ore – located mainly in the state of Minas In the 1910s, certain factors began to favor the development and privileges to companies or individuals, Brazilian or foreign, Constitution, these powerful companies, known as “syndicates,”
Gerais and, to a less extent, in Mato Grosso – were a great distance not of steelmaking. Studies and research conducted by students and that proposed to build steelworks in Brazil. These favors included acquired all of the identified deposits, awaiting the time they judged
only from the coal reserves of Rio Grande do Sul and Santa Catarina, professors at the Mining School confirmed that the country had the right to construct, equip and operate quays, bridges and docks, most convenient to exploit them. The landowners in these areas,
but also from the potential iron and steel consuming markets of Rio large reserves of high-quality iron ore. In turn, an increase in and permission to connect mineral deposits and plants to railroads not knowing the value of what lay beneath the ground, sold their
de Janeiro, São Paulo and the northeast of the country. The high cost the pace of railroad and port construction, the growth of urban and ports through branch lines. The government also granted land for much less than its true worth.22
of railroad transportation and the low quality of Brazilian coal for infrastructure in the major Brazilian cities, and rising agricultural exemption from taxes and reduced ore loading and unloading One of these companies was the Itabira Iron Ore Company, the
coking purposes (the transformation of coal into coke, an essential production (which needed tools and machines) led to growing charges at federal ports.20 subject of a long legal and ideological dispute stretching from the
fuel used in steel blast furnaces) were other major difficulties. imports of iron, steel and metal artifacts. Another notable occurrence during this period was the 11th 1910s to the 1930s.
Besides these problems, there were others related to the limited size The First World War (1914-1918) also had a major influence on International Geological Congress of September 1910, held in
of the domestic market, a shortage of capital, and the lack of an the Brazilian steel industry. The conflict hindered iron and steel Stockholm. This event was convened by the major European and
appropriate tariff policy. Iron imported from Europe, for example, imports, generating shortages of products. This exposed the fragility North American steel companies, with the purpose of making a
enjoyed a special tariff, a privilege it had held since the 1810s.14 and dependence of Brazil’s economy and demonstrated the need to detailed assessment of global iron reserves. Delegations from many
For all of these reasons, until the start of the 1920s, steelmaking harness the country’s abundant mineral resources. countries attended the event, including Brazil, represented by
in Brazil was practically limited to the smelting of iron in small Orville Derby.
furnaces fed by charcoal, generally located close to iron ore deposits Derby went to the congress with the intention of showing Brazil’s
and forests where timber was harvested to make charcoal.15 These 17 - For more information, see Suzigan, Wilson, op. cit., pp. 232-245. mining potential to the rest of the world. He presented a report
facilities were mainly located in Minas Gerais, in the municipalities 18 - The Esperança Plant was established in 1888 through an initiative led by Swiss by the Geological and Mineralogical Service of Brazil, produced
metallurgist Alberto Gerspacher and Brazilians Amaro da Silveira and Carlos da Costa by Gonzaga de Campos, that identified Brazilian mineral deposits,
of Ouro Preto, Mariana, Santa Bárbara, Itabira, Conceição and Minas Wigg, near the town of Itabirito, Minas Gerais. The plant’s charcoal-fed blast furnace
Nova.16 And nearly everything produced there was destined for began operating in 1891, and could produce between four and five metric tons of pig evaluated them for their potential, and gave their exact position
“domestic use.” iron per day. Owned by the Companhia Forjas e Estaleiros between 1892 and 1897, on a map of Minas Gerais. The report also reported the existence
and the Leandro Queiroz company between 1897 and 1899, the Esperança Plant was of iron ore in the states of Bahia, Goiás, São Paulo, Paraná, Santa
acquired in 1899 by engineer J. J. Queiroz Júnior. In 1916, following the death of its owner,
the plant was renamed the Queiroz Júnior Plant. See Suzigan, Wilson, op. cit., chapter Catarina, Rio Grande do Sul and Mato Grosso. For these states,
14 - See Paiva, Glycon de. O Serviço Geológico e Mineralógico do Brasil (1907-1933) como antecessor 4, and Chiarizia, Martha M. de Azevedo, op. cit., chapter 1. The Companhia Siderúrgica
do DNPM (a speech given at a dinner hosted by the SEMOP to celebrate the DNPM’s 50th Mineira was established in 1917 in Sabará, by Amaro Lanari, Cristiano Guimarães and
anniversary), unpublished academic paper, n.p. Gil Guatimosin, former students of the Ouro Preto Mining School. The company began
production in 1920, turning out 10 metric tons of pig iron per day. Iron ore was extracted 19 - Bandeira, Luiz Alberto Moniz. A ideia de nação no Brasil. In: Bresser-Pereira, Luiz Carlos
15 - See Suzigan, Wilson. Indústria brasileira: origem e desenvolvimento. São Paulo: Brasiliense, from the Andrade deposit close to the plant, from where it was transported by the Central (org.). Nação, câmbio e desenvolvimento. Rio de Janeiro: Editora FGV, 2008. p. 46.
1986, p. 257. do Brasil Railroad. Charcoal was made in the region’s woods. See Soares e Silva, Edmundo 20 - See Luz, Nícia Vilela. A luta pela industrialização do Brasil. São Paulo: Difusão Europeia do 21 - See Chiarizia, Martha M. de Azevedo, op. cit., chapter 1.
16 - See IBGE, Séries estatísticas retrospectivas, vol. 2, part 1, p. 463. de Macedo, op. cit., pp. 61-62. Livro, 1961, pp. 188-189, and Barçante, Itagyba, op. cit., vol. 1, p. 105. 22 - Idem, ib.
A debenture certificate
issued by the Vitória-Minas
Railroad in 1911. Following
page: train cars carrying
ore along the EFVM.
Arthur Bernardes was 45 years old, a qualified lawyer and Soon after gaining control of the Itabira Iron Ore Co., Farquhar
a charismatic politician. He always began his speeches with a made a proposal to the Brazilian government to build a steel mill at
32 reference to his home town (Viçosa), his family and the worthy no cost to the public purse, in exchange for authorization to export 33
people of Minas Gerais. Before joining the state government, he had 4 million metric tons of iron per year. The proposal was well received
twice been elected a federal deputy, both times as a member of a by the President of the Republic, Epitácio Pessoa, who had been
nationalist party. As leader of the state government of Minas Gerais, elected in 1919, and by his Minister of Transport and Public Works,
he was supported by Clodomiro de Oliveira, whom he appointed to José Pires do Rio. The president also looked favorably on the inflow of
run the Secretariat of Agriculture, Industry, Trade and Public Works. foreign capital to the country. It was estimated that the Itabira Iron
Together, they formulated the rules for mining iron in Minas Gerais. Ore Co. would invest around 60 million dollars in the project.32
With or without the Itabira Iron Ore Co.28 And so, on May 29, 1920, a contract was signed by which the
In 1919, Bernardes enacted Law 750, which raised the tax on federal government authorized the Itabira Iron Ore Co. to build and
iron ore exports to 3,000 réis per metric ton for companies that operate coke-fed blast furnaces, steel plants and rolling mills, a
were exclusively export-focused. In compensation, the law set the dedicated iron ore port in Santa Cruz (now called Aracruz), to the
tax at 300 réis per metric ton, for 20 years, for exporting companies north of Vitória, and two railroad branch lines starting from the
that would build a steel mill in the state and process at least 5% of Vitória-Minas line: one toward Itabira and the other to the Port of
the amount of ore exported.29 The terms of Law 750 evidently did Santa Cruz. Both the branch lines and the port would be owned
not please the Itabira Iron Ore Co., especially as it had previously by the company, giving it the unrestricted right to export Brazilian
managed to obtain from the federal government, through Decree iron ore. The exported ore would be transported on ships owned by
12,094 of June 7, 1916, an end to its obligation to build a steel mill.30 Itabira, which would carry coal on the return journey to feed the
Also in 1919, the Itabira Iron Ore Co. changed hands: it was steel mills.
bought by American businessman Percival Farquhar, the company’s Overall, the contract granted a period of 24 months to start the
former representative in Brazil. Farquhar had arrived in Brazil 15 work and 48 months for the facilities to come into operation. If
years before, and had specialized in businesses involving foreign at the end of the period the requirements had not been met, the
companies and the public sector. In 1905, he worked on the government could declare the contract forfeited and terminate
establishment of Canadian company Rio de Janeiro Tramways, it, and the company would be obliged to pay a fine. The contract
Light and Power, which would later become known simply as Light. also stated that the Port of Santa Cruz would return to government
Farquhar had also been involved in controversial projects, such as ownership after 90 years and, after 45 years, the Brazilian government
a venture to sell timber and rubber in the Amazon.31 could acquire the Itabira Iron Ore Co.’s set of properties. Finally,
another clause in the contract stated that, in order to proceed with
28 - Bernardes’ speeches may be read in Discursos selecionados do Presidente Arthur Bernardes the venture, the company would have to sign an additional contract
3,organized by Izabela Medeiros de Souza, Fundação Alexandre de Gusmão, Brasília, with the state government of Minas Gerais.33
Ministério das Relações Exteriores, 2010. His biographical details may be consulted in
Koifman, Fábio (org.). Presidentes do Brasil. Editora Rio, 2001.
29 - See Diniz, Clélio Campolina. Estado e capital estrangeiro na industrialização mineira. Belo
Horizonte: UFMG/PROED, 1981, p. 46.
30 - See Suzigan, Wilson, op. cit., p. 262.
31 - For more information, see the entry for “Farquhar, Percival,” DHBB, available at: <http:// 32 - See Chiarizia, Martha M. de Azevedo, op. cit., pp. 27-28, 33. A chart showing Brazil’s
www.fgv.br/CPDOC/BUSCA/Busca/BuscaConsultar.aspx>. 33 - Idem, ib., pp. 35-37, and Abreu, Alzira Alves de, op. cit., p. 1,629. mineral deposits in 1929.
1 - Carone, Edgard. A República Velha. São Paulo: Editora Bertrand Brasil, 1974.
Moraes, Fernando. Chatô, o Rei do Brasil. São Paulo: Companhia das Letras, 1994.
36 1.5 The nationalist backlash a plant in the state capable of producing at least 150,000 metric 37
tons of steel products per year. The decree also extended the period
of tax benefits for steel producers from 20 to 30 years.36
The monopolistic power gained by Itabira by signing the contract Within the federal government, the mood had also started to
inflamed nationalist opposition. After it was signed, the contract worsen for the Itabira Iron Ore Co., following Epitácio Pessoa’s
was duly submitted to the Federal Audit Court, which refused to departure from the presidency. His successor was none other than
register it, alleging violation of legislative norms. Epitácio Pessoa Arthur Bernardes, who upon taking office in March 1922, sought
pressured the Court and the contract ended up being registered to offer a nationalist alternative to the foreign company’s plans.
reluctantly. However, Pessoa’s intervention made it necessary to To this end, he set up a commission formed of parliamentarians,
return the contract to the National Congress for approval, where technicians and industrialists, which in 1923 presented its first
it was examined by various commissions, without a definitive draft of a national steel industry plan. This work was led by his
conclusion being reached as to its validity.34 right-hand man and former Secretary, Clodomiro de Oliveira.
Farquhar’s plans affected many interests. The owners of small The commission’s work provided the basis for Decree 4,801, passed
metallurgical plants in Minas Gerais feared that the Itabira Iron Ore on January 9, 1924. Confirming the nationalist orientation of Bernardes’
Co.’s planned exclusivity would suffocate their operations. Foreign government, the decree provided for the granting of loans by the
companies, which had bought vast swathes of land on which to federal government exclusively to Brazilian companies established
mine iron ore, were also apprehensive about the transportation with the purpose of building mills.37 This orientation became even
exclusivity achieved by Farquhar. The coal companies of Rio Grande more accentuated in the constitutional reform led by Bernardes in
do Sul and Santa Catarina did not welcome competition from foreign 1926, which prohibited the transfer to foreigners of mines and mineral
coal, which would arrive in Brazil in Itabira’s ships. The project was deposits required for the safety and defense of the country.
also opposed by all the German, English, French and American In Minas Gerais, the policy adopted by Arthur Bernardes
suppliers of machines and tools, which feared competition from concerning mining and, above all, the Itabira Iron Ore Co., was
the output of the steel mill to be built by Itabira.35 followed to the letter by his successor to the state presidency, Raul
Minas Gerais, as it was the state with the biggest mineral Soares (1922-1924), and his successor, Fernando de Melo Viana
deposits, became the center of resistance against Farquhar and (1924-1926). The impasse created for the signing of the state contract
the politicians allied with him. Arthur Bernardes, under pressure with the Itabira Iron Ore Co. would only be overcome during the
because, by signing the second contract, he would have to ratify administration of Antônio Carlos Ribeiro de Andrada (1926-1930).
the contract already signed by the Itabira Iron Ore Co. and the On December 7, 1927, the second contract was finally signed, by
federal government, enacted Law 793 on September 21, 1920. This which the Itabira Iron Ore Co. would only be able to start to export
law reaffirmed the terms of Law 750 and made it a condition for iron ore when it had begun operating a steel mill.38
exporting iron ore that the Itabira Iron Ore Co. would have to build
38 39
In an attempt to make it feasible to approve the company’s In September 1930, Itabira once more obtained a dispensation
projects and placate the violent attacks on the monopolistic from its obligation to build the steel mill, taking advantage of the
aspects of its contract, the president of the state of Minas Gerais, discontent and political power of small manufacturers of pig iron,
Antônio Carlos, made approval of Itabira’s plans conditional which feared the possibility of the company building it.40
upon the removal of its monopoly on the use of the Vitória-Minas With due legal authority to develop its plans in Brazil, Itabira
Railroad, granted by the contract of 1920. Accordingly, on November sought funding from European and American banks. However,
10, 1928, Itabira signed a waiver by which it relinquished its right the global economic crisis of 1929 and the subsequent downturn
to exclusively transport its own ore on the railroad, and agreed to in financial markets, together with political and institutional
also carry ore belonging to third parties, as well as passengers and transformations brought by the Revolution of 1930, opened up a new
agricultural goods from the region through which the tracks passed. stage in the Itabira Iron Ore Co.’s struggle to implement its projects.
The signing of the waiver paved the way for the enactment, two
days later, of Federal Decree 5,568, which attested to the legalization
of the contract by the National Congress, and State Decree 8,045
of December 8, 1928, by which the government of Minas Gerais
authorized Itabira to begin its activities.39