Mining and the State in Brazilian Development

Published by EH.Net (March 2012)

Gail D. Triner, Mining and the State in Brazilian Development. London: Pickering and Chatto, 2011. xvii +253 pp. $99 (hardcover), ISBN: 978-1-84893-068-1.

Reviewed for EH.Net by Amanda Hartzmark, Department of History, University of Chicago.

The scholarship on Brazilian iron and steel production is extensive.? Historians have examined numerous aspects of these industries ranging from their general impact, to performance, to labor relations and to the characteristics of state-owned enterprise.?? Conversely, only a few works address the mining of the minerals that undergirded the iron and steel industries, such as iron ore.???????

Gail D. Triner, an Associate Professor of History at Rutgers, presents a political economy of mineral resources in Brazil.? Although her methodology is largely borrowed from ?new institutional economic history,? Triner seeks to counter weaknesses in this approach by including ?non-human actors,? such as the state and mineral resources (p. 4).? More importantly she shows how producing wealth from mineral resources required the ?coordination and accommodation? of existing institutions (p.1).? Triner traces three institutions related to minerals over time: the rules and practices governing property, business enterprise and capital markets.? Triner argues that the structure of institutions was not as important as the interactions among them and further, the interaction between these institutions and mineral resources.?

The book is divided into three parts.? The first provides historical context and outlines the major phases of the rules and practices governing private property related to minerals.? Part two examines the evolution of private property rights in more detail and adds her analysis of the interactions with two other institutions, business enterprise and capital markets.?? Part three links the narratives in the previous section to larger developments, both past and present, in economic ideologies and economic governance.??????????

While emphasizing continuity and an overriding concern to ensure the integrity of ownership rights of fixed assets, Triner delineates three phases of property rights.? During the colonial period and after independence, control of mineral resources belonged to the monarch or the state and land rights were treated as separate from subsoil or mineral rights.? In 1891, new legal interpretations attached subsoil to surface rights and gave legal control of mining to states in the Brazilian federation.? This was the legal arrangement until subsoil rights were again separated from surface rights under Get?lio Vargas in 1934, with the control of minerals reverting to the federal government.?????

In Part II, Triner weaves imperial charters, contemporary studies of the iron ore industry and her own re-examination of the St. John D?el Rey Mining Company into a larger narrative of failed attempts to jumpstart a stagnant iron ore industry prior to 1891.? She argues familial ownership patterns in Brazil allowed claimants to petition for shared ownership or profits leading to constant renegotiation over property (p. 53).? This interaction between property rights and enterprise resulted in kinship-based companies and partnerships that complemented legal structures, an argument that largely echoes Marshall Eakin?s work on industrialization in Minas Gerais.????????

Triner?s most compelling chapter addresses the period from 1891 to 1933.? Contrary to previous scholarship, Triner argues that privatization was not a complete failure and suggests that land transfers for mining and mining activity rose in Minas Gerais during the First Republic.? These claims are based on analysis of a data set comprising federal and state (Minas Gerais) laws and decrees governing mining rights, concessions to prospect and extract minerals, and sales of land in Itabira and Sabar? from 1880 to 1940. Triner assigns each law and decree a value based on whether it increased, decreased or had no effect on mining constraints (p. 59).? Overall, regulations tended to facilitate mining activity, but progress was slow.?? Triner argues that potential miners sought executive decrees to obtain tax and other benefits quickly.? Decrees were easier to obtain for individuals.

In showing that institutions favored family firms and individuals, Triner identifies impediments to large-scale enterprise that pooled capital in the Brazilian iron ore industry.?? Foreign enterprise offered a way of surmounting the problems of capital accumulation and Triner includes an examination of one foreign-owned company?s operations, Itabira Iron Ore Mining.?

Early on, Triner notes that the state served multiple roles, one being a tool for interests groups.? After 1930 two interest groups, the military and industrialists, pushed the state into an entrepreneurial role in mining iron ore.? World War II was a watershed moment.? In response to nationalist pressure, Itabira?s assets were transferred to the control of the Brazilian state.? The state then created two state-owned enterprises (SOEs), one for iron and another for steel ? Companhia Vale do Rio Doce and Companhia Siderugica Nacional.? The state?s presence solved the problem of capital accumulation and technological coordination without challenging other longstanding institutional arrangements.?? Triner argues the state anticipated the positive externalities from the railways and ports the SOEs built, but that these companies provided unanticipated benefits to financial institutions (p. 92).? The U.S. Export-Import Bank loaned the state money to invest in the industry despite its existing debts.? Triner notes this loan helped to recreate the image of the Brazilian government in international capital markets.?

In studying mineral production, Triner provides a valuable contribution to scholarship.?? Her analysis of property rights is innovative and identifies specific features that impeded growth in the mining industry.? She extends her arguments to claim that defining and debating property rights was critical to transforming the state?s role in the economy.? Further, Triner argues that experience with an iron ore SOE set a precedent for later debates on resources.? The weight of mineral property rights in pushing the state towards economic action is difficult to quantify and disentangle from other factors.? This makes these arguments harder to fully support.? Iron ore and steel did figure prominently in nationalist discussions of the 1930s and 1940s, but so too did politics, the balance of payments crisis, foreign capital, trade and the rise of technocrats in government.? Triner also leaves out a discussion of the impact of the world market for minerals.? In at least one case, that of manganese, a tripling of the world price for the mineral drove a land rush in Minas Gerais in the 1910s.? This affected land sales in her period of privatization, and may have influenced her results.? Triner also does not address educational institutions and technological change in the mining industry, which may have increased the desire and ability to create an SOE.? Despite these critiques, Triner?s work shows how accounting for institutional change and interaction can add to our understanding of key industries.

Amanda Hartzmark is a Ph.D. candidate at the University of Chicago and served as a Fulbright scholar in Brazil in 2011.? She is working on her dissertation entitled, ?Cooperatives in the Brazilian Sugar Industry, 1945-1990.?

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