Quantcast
Get breaking news alerts via email

Click here to manage your alerts
In this Aug. 14, 2013 photo, Mexican army soldiers enter the iron ore mine in the town of Aquila, Mexico. A resident of Aquila, said that since 2012, the Knights Templar cartel demanded residents hand over part of the royalty payments from the local iron ore mine operated by Ternium, a Luxembourg-based consortium. Mexican drug cartels long ago moved into oil theft, pirated goods, extortion and kidnapping, but it still came as a shock this month when federal officials revealed the gangs have broadened the scope and sophistication of their economic empires by entering the country’s lucrative mining industry, exporting iron ore to Chinese and other foreign mills. (AP Photo/Agencia Esquema)
Mexican drug cartels now make money exporting ore
First Published Nov 29 2013 08:15 am • Last Updated Nov 29 2013 10:03 am

Mexico City • Mexican drug cartels looking to diversify their businesses long ago moved into oil theft, pirated goods, extortion and kidnapping, consuming an ever larger swath of the country’s economy. This month, federal officials confirmed the cartels have even entered the country’s lucrative mining industry, exporting iron ore to Chinese mills.

Such large-scale illegal mining operations were long thought to be wild rumor, but federal officials confirmed they had known about the cartels’ involvement in mining since 2010, and that the Nov. 4 military takeover of Lazaro Cardenas, Mexico’s second-largest port, was aimed at cutting off the cartels’ export trade.

Photos
Join the Discussion
Post a Comment

That news served as a wake-up call to Mexicans that drug traffickers have penetrated the country’s economy at unheard-of levels, becoming true Mafia-style organizations, ready to defend their mines at gun point.

Three Michoacan state detectives were wounded in an ambush earlier this week when they were traveling to investigate a mine taken over by criminals. When reinforcements arrived, those officers were also ambushed, part of a string of attacks on police in Michoacan on Wednesday and Thursday that left two officers dead and about a dozen wounded.

The Knights Templar cartel and its predecessor, the La Familia drug gang, have been stealing or extorting shipments of iron ore, or illegally extracting the mineral themselves and selling it through Pacific coast ports, said Michoacan residents, mining companies and current and former federal officials. The cartel had already imposed demands for "protection payments" on many in the state, including shopkeepers, ranchers and farmers.

But so deeply entrenched was the cartel connection to mines, mills, ports, export firms and land holders that it took authorities three years to confront the phenomenon head-on. Federal officials said they are looking to crack down on other ports where drug gangs are operating.

"This is the terrible thing about this process of (the cartel’s) taking control of and reconfiguring the state," said Guillermo Valdes Castellanos, the former head of the country’s top domestic intelligence agency. "They managed to impose a Mafia-style control of organized crime, and the different social groups like port authorities, transnational companies and local landowners, had to get in line."

Valdez Castellanos said that even back in 2010, the La Familia cartel would take ore from areas that were under concession to private mining companies, sometimes with the aid or complicity of local farmers and land owners, then sell the ore to processors, distributors and even, apparently, foreign firms.

Mexico’s Economy Department said the problem was so severe that it prompted the government to quietly toughen rules on exporters in 2011 and 2012 and make them prove they received their ore from established, recognized sources.

Many exporters couldn’t. In 2012, the department denied export applications from 13 companies, because they didn’t meet the new rules. And the problem wasn’t just limited to Michoacan, or the Knights Templar cartel.


story continues below
story continues below

"Since 2010, evidence surfaced of irregular mining of iron in the states of Jalisco, Michoacan and Colima," the department said in a statement to The Associated Press.

"That illegal activity was encouraged by the great demand for iron by countries such as China, to develop their industries," according to the department. "Many trading companies began to build up big stockpiles of legally and illegally obtained iron (ore), that was later shipped out for export."

A Mexican federal official, who was not authorized to speak on the record, said the cartels would use a combination of threats and outright theft to get the ore from mines. He said the nexus between the cartels and export companies was key.

"They extort the merchandise from mining companies and then export it through legal companies, or they rob trucks full (of ore) that later turn up in a legal manner," the official said.

Ofelia Alcala, a resident of the Michoacan mining village of Aquila, said that since 2012, the Knights Templar cartel has demanded residents hand over part of the royalty payments from a local iron ore mine operated by Ternium, a Luxembourg-based consortium. Alcala, a member of a self-defense group that rose up in arms in Aquila this summer to kick the cartel out, said the cartel also had been hiring people to extract the ore without permits, and then exporting it through another Pacific coast port, Manzanillo.

"They weren’t content with getting our money and robbing our trucks, so they began secretly extracting our minerals," said Alcala.

Ternium said in a statement that it has received reports of irregular mining near its operations in Aquila.

"Those have been passed on to the appropriate authorities," the company said in a statement.

Government figures show the amount of iron ore being exported to China quadrupled between 2008 and the first half of 2013, rising to 4.6 million tons per year, precisely during the period the La Familia cartel and later the Knights Templar cemented their control over Michoacan.

In 2008, Lazaro Cardenas handled only 1.5 percent of Mexico’s iron ore exports to China; by mid-2013, the seaport was shipping out nearly half.

In 2010, the attorney general’s office estimated the cartels shipped 1.1 million tons of illegally extracted iron ore abroad that year.

Next Page >


Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment


About Reader Comments


Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Videos
Jobs
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Login to the Electronic Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.