Goan ore and Japanese steel
Fourth in a series on Portuguese companies and investors in Asia — what they built, what survived, and what is still being built today.
WHEREAS certain mining concessions have been granted in perpetuity under the former Portuguese Mining Laws (Decree of 20th day of September, 1906) in the territories now included in the Union territory of Goa, Daman and Diu by the former Portuguese Government… — The Goa, Daman and Diu Mining Concessions (Abolition and Declaration as Mining Leases) Act, 1987. Act No. 16 of 1987, Parliament of India.
There is a page on the website of V. M. Salgaocar & Brother, one of Goa's oldest mining houses, that I would encourage anyone to read. It describes the company's export history, and it begins like this: the firm's first consignment was 16,500 tons of iron ore, shipped in 1952 to Fuji Steel through the Itochu Corporation, when Goa was still under Portuguese rule.
A few lines further down there is a sentence the company is evidently proud of. Salgaocar's ore was the first seaborne ore to enter the blast furnace of POSCO, the South Korean steelmaker, when sales there began in 1972.
This is a corporate export page, not a history book. But it contains the thing this series has been circling since the first instalment: a Portuguese territory in Asia whose principal business was not administration, not religion and not the carrying trade, but the direct sale of a commodity, at industrial scale, to the fastest-growing economy in the world.
The previous instalment described Portuguese and Macanese families who made their living as intermediaries: clerks, printers, brokers and consuls, standing between a British administration and a Chinese or Malay commercial world. In Goa they owned the asset. Goan firms held the mining concessions, dug the ore, and contracted directly with steel mills in Japan and Europe.
Why Japan
By the early 1950s Japan was rebuilding its steel industry from a standing start, and it was doing so in a particular way: enormous new plants on the coast, designed so that ore ships could unload directly at the works. By 1962 Japan was the fourth largest steel producer in the world, making around thirty million tons a year, roughly four times its pre-1950 output.
That coastal model needed imported ore in volume, delivered cheaply by sea, and Japan had almost none of its own. Goa had a great deal.
Goan iron ore is of lower grade than ore from other parts of India, which is why almost all of it was exported rather than used domestically. But it sat close to navigable rivers, the rivers ran to a deep-water port at Mormugão, and Mormugão was the one harbour on that coast where ships could come straight in from the open sea and lie alongside the quay. Low grade, low cost, short haul to the ship. For a Japanese mill buying on delivered price, the business case worked.
The first test shipment of Goan ore to Japan appears to have gone in 1939, under Vishwasrao Chowgule. After the war the volumes moved quickly: 9,000 tons of iron ore to Japan in 1947, Salgaocar's 16,500 tons to Fuji Steel in 1952. Manganese exports of about 100,000 tonnes in 1951 had become some 6.4 million tonnes of ore exports by 1961.
There is a detail from this period worth sitting with. Chowgule obtained finance from Japanese steel corporations to build a mechanized ore-handling plant at Mormugão — reportedly the first facility of its kind in Asia. Japanese capital was being invested in port infrastructure inside Portuguese territory, to move ore to Japanese furnaces, in the 1950s.
The blockade, and what paid for it
Here is where the commercial history and the political history collide, and where I think the story has been under-told.
On 1 August 1954, India imposed an economic blockade on Goa, Daman and Diu, intended to force Portugal out. The logic was sound on the face of it. Goa's economy faced India, not Portugal: something over 60% of its trade was with India against under 8% with Portugal; two-thirds of the currency circulating in Goa was Indian; in 1951 remittances from India to Goa were some 68 million rupees against 4 million from Portugal.
Cut those links, the reasoning went, and the enclave would become insupportable.
It did not work, and the reason it did not work is the subject of this instalment. Ore exports surged, and they earned foreign exchange that paid for the food and goods that could no longer come overland from India. The colonial administration issued mining concessions liberally through the 1950s, with an explicit political purpose alongside the economic one: to demonstrate that Goans lived better under Portugal than Indians did in independent India.
So the blockade was answered by the ore, and the ore was bought by Japan and Western Europe. Portuguese Goa survived its last seven years on the proceeds of Japanese and German reconstruction. Salazar's Estado Novo held an Indian enclave against the Indian state partly on Japanese steel money — and, as far as I can tell, this is not how the episode is usually narrated on either side.
Five companies and a baron
The firms that did this were, with one exception, Goan family businesses rather than Portuguese metropolitan ones.
Chowgule & Co. grew out of a cargo-handling and shipping-agency business, expanded during the war when Mormugão became a wartime export hub, and moved into ore. V. S. Dempo had been importers and underwriters in the 1940s, bringing in food grains, before going into mining and beginning Japanese exports in the 1950s. V. M. Salgaocar & Brother had been one of the largest import houses of the 1940s, with vessel contracts across British India, before the 1952 Fuji Steel shipment.
Sociedade de Fomento Industrial was founded in 1957, sent its first shipment to Holland, and went on to supply Sumitomo Metal Industries and Nippon Steel for over fifty years. In 1990, Sumitomo gave the firm what the company describes as an evergreen covenant. It is still operating, and it still carries a Portuguese name in an Indian state.
The exception is Sesa Goa, and its origin is stranger than the rest. In 1954, Baron Ludovic Toeplitz, an Italian, arrived in Goa, acquired the Orasso Dongor mining concession in the north of the territory, and founded a company called Scambi Economici S.A. — "Economic Exchanges." It was renamed Sesa Goa, and by 1955 was jointly held by a German mining partnership and Ferromin S.p.A., part of the Italian state industrial group IRI. In 1957 another company, Mingoa, was incorporated in Goa with Fiat of Turin as its principal shareholder.
That is worth restating plainly. Under Portuguese sovereignty, a concession regime open to foreign capital brought Italian state industry, Fiat, and German mining money into a small territory on the Konkan coast, to dig ore for Japanese and European furnaces. Portugal itself supplied the legal framework and very little of the money — exactly the pattern this series has been tracing since the armação.
The decree of 1906
Which brings us to the document.
Portuguese colonial mining law in Goa rested on a decree of 20 September 1906. Under it, a prospector obtained a title of manifest, roughly a prospecting licence, and could then convert it into a title of concession. The title of concession functioned much like a mining lease, with one enormous difference.
It was perpetual.
Not a term of years. Not renewable on review. A property right in the ore, granted by the state, running indefinitely and capable of being sold, transferred and inherited. By the time of the Indian annexation in December 1961, something in the order of 800 mineral concessions had been issued under it — a figure cited in Goan sources and that should be verified against the Portuguese record.
This is the clearest example in the whole series of the argument set out in the second instalment. Portugal did not build corporations in Asia. It issued rights. And a right, once issued, is remarkably hard to kill.
What India did about it, and how long it took
Goa was annexed in December 1961, which extinguished Portuguese sovereignty. It did not extinguish the concessions.
India needed the foreign exchange the ore earned, and the mine owners were among the wealthiest and best-connected people in the new territory. So mining simply continued: ore extracted, exported, taxes paid, titles transferred and renewed — under Portuguese colonial mining law, in a state of the Indian Union. The Goa Administration Act of 1962 required Portuguese laws to be formally repealed. In the case of the mining law this never happened.
It took until 23 May 1987 for Parliament to pass Act No. 16 of 1987, which abolished the concessions and declared them to be mining leases under Indian legislation instead, backdated to 1961 and running twenty years, later extended to 2007. That is the Act quoted at the top of this post. An Indian statute of 1987, opening by reciting a Portuguese decree of 1906, in order to abolish the rights it had created.
And even that did not settle it. The constitutional validity of the 1987 Act has been challenged by Goan mine owners and the litigation has run for decades. A decree signed in Lisbon under the constitutional monarchy was still generating argument in India's Supreme Court more than a century later.
After many twists and turns, mining in Goa was suspended in 2012 after a commission of inquiry found widespread illegality, and has been halted again since 2018 while the leases are relitigated.
If you want a single illustration of why Portugal's durable Asian assets were licences rather than companies, this is it. Nobody had to fight for a hundred years about the shares of the Companhia da Índia Oriental Portuguesa.
O que sobrou — what is still there
Sociedade de Fomento, still operating, still trading under a Portuguese name in Goa nearly seventy years after it was founded, and around sixty-five years after the sovereign that licensed it departed.
The word concession in Indian mining litigation. The 1987 Act is still being contested, and the phrase Portuguese Colonial Mining Laws, 1906 still appears in Indian legal filings.
Mormugão port, developed under Portuguese administration from 1886 with a rail link through the Western Ghats, and still Goa's major port.
A Japanese thread that never quite broke. Mitsui & Co. held the controlling stake in Sesa Goa until 2007, when it sold 51 per cent to Vedanta. The company founded by an Italian baron under Portuguese law spent its later decades with a Japanese trading house as its largest shareholder.
The pits. Goa's abandoned open-cast workings are visible from the air on the approach to Dabolim, and they are not going anywhere.
Next
Ore is the easy case. It is dug, weighed, shipped and paid for, and the moral questions arrive afterwards, in the form of dust and litigation.
The next instalment is about a Portuguese company in Asia that grew something instead — a crop still exported today, from a country that is now independent, under a brand that trades on its origins. The company was founded by a sitting colonial governor. It took land from the people who lived on it and hired them back to work it. And in 1940 its shareholders included the Portuguese state, Banco Nacional Ultramarino, and a Japanese firm.
Next in the series: Timor, coffee, and the Sociedade Agrícola Pátria e Trabalho.
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