Mexican Organized Crime Invests in Iron Ore

mexican organized crmeMexican organized crime have come to understand that the drug business comes with many unexpected costs and one particular cartel makes its principal source of income from investing in iron ore. The Knights Templar, a psuedo-religious criminal organization that controls the western Mexican state of Michoacan, profits from what can be extracted from the ground instead of what can be grown from the ground. Over the past few years, they have infiltrated the mining sector and have become wealthier from their iron ore investments than the drug trafficking trade.

The Knights Templar are successors of the now-defunct La Familia cartel and have garnered both notoriety and lore from their illegal activities and cult-like beliefs. The cartel’s founding member, kingpin Nazario Moreno, who was gunned down by Mexican authorities on March 2014, is highly revered and exalted by members of the Knights Templar. Cartel members strictly adhere to a 22-page code book of Moreno-isms littered with images of cloaked knights carrying lances and crosses. The cartel began producing and transporting methamphetamine then started to diversify into illegal mineral mining and smuggling of iron ore.

The Knights Templar and other Mexican organized crime groups, are believed to have made $1 billion dollars in 2013 from their illicit investments in the iron ore business. The cartel charges $15 a metric ton which includes the process of extraction, transportation, storage, permits and to the final stage of exportation. The $15 is not the price of the iron ore but their skim off every ton that arrives at Michoachan’s Lazaro Cardenas port for exportation. It has been reported that by 2012, 50 percent of the iron ore that passed into the People’s Republic of China has originated from Michoachan’s Lazaro Cardenas port.

President Enrique Pena Nieto’s administration has recognized that Mexican organized crime cartels are more than just drug peddling gangs, they are multinational corporations that will adapt to market trends to keep themselves wealthy. The Knights Templar’s bread and butter is iron ore, but they have also made $800,000 to $1.4 million a week from extorting money from lime and avocado producers in Michoacan. They controlled the wholesale distribution center of limes where prices are determined and sold to the rest of the world.

The Knights Templar’s stronghold on Michoacan has spawned resistance from local vigilante groups and federal authorities. Vigilante groups have armed themselves to fight back with the help of federal authorities. Local law enforcement have been demobilized by community police groups because they were deemed to be too ineffective to fight against the cartel. Governor of Michoacan, Fausto Vallejo has pleaded to the government for more aid because his state’s police force is too small to fight the cartel and the vigilante groups.

Recently the government have had some success in striking a blow in the cartel’s financial resources. In November, the Mexican federal government has gained control of the Lazaro Cardenas port and since has seized 119,000 metric tons of iron ore. They have also freed the wholesale lime distribution center by taking control of the farming hub of Apatzingan. Mexican organized crime investing in the iron ore trade is just the beginning, as the cartel move into more legitimate enterprises it will take more money out of the pockets of hard-working citizens.

By Isriya Kendrick

Australian Journal of Mining

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