This study analyzed the development of the production of merchant pig iron in the Eastern Brazilian Amazon in the last quarter of the 20th century that was intended to supply the international steel market. In the 1980s, the state announced that industrial merchant pig iron plants would be an element in the strategic plan for the economic modernization of the region. This policy justified the granting of tax, credit and infrastructure benefits to 22 merchant pig iron and metallurgy companies. In examining the environmental effects of implementing this plan, the study found that the processes involved in producing pig iron are not energy efficient and have resulted in the consumption of the biomass supply of the Amazonian rainforest without consideration of the ecological consequences, resulting in increased human-generated pressure on that ecosystem. The study found that the plans to cultivate large areas of the rainforest to produce charcoal were not carried out, having been merely rhetoric, with no realistic basis. In the economic dimension, the study indicated that the limited success of the pig iron industry in stimulating processes of modernization is due to, among other things, the fact that the industry’s demand for charcoal is its primary connection with the region’s society and economy. This demand is met by hundreds of suppliers and, in this way, the industry controls the profit margin and reduces its production costs, transferring its private costs to the whole society. In addition, this study showed that the performance of this sector depends on the economic and institutional conditions. Specifically, the planting of forests to provide energy for industry requires long-term investment and there are wide oscillations in the price of pig iron. In addition, there are institutional dynamics at play that make it more possible to illegally exploit primary rainforest biomass for producing charcoal. Historically, these factors have led to the industry using charcoal from primary rainforest biomass rather than that produced through forestry. Based on this evidence, the study concluded that the state’s prediction of a regional modernization trend has not been realized. This is principally due to a lack of ability on the part of society to regulate the processing of materials and energy into merchandise, and the industry has therefore been marked by social and environmental degradation. Its effects have been contrary to those predicted in the state’s rhetoric; it has accelerated the transfer of energy, materials and value to other regions. The region has not had the capacity to balance this loss of energy and material resources with the importation of products, nor has the loss been balanced by the implementation of efficient mechanisms for the ndustrialization of the region.
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