Mexico has been a mining nation for a long time. During the times of the Spanish Empire Nueva España (as Mexico was known at the time), it was extraordinarily famous in all Europe for the great amounts of silver that mines such as those from Guanajuato, San Luis Potosi or Zacatecas produced. In fact, it was Mexican silver (along with Bolivian silver) the precious metal the Spaniard kings used most to finance their never ending wars against the Protestant nations. More recently, under the rule of Porfirio Diaz, Mexico's mines opened to foreign investment. American, English and French companies established in the Aztec country in order to open new pits and extract iron, lead, gold, silver and a nearly a dozen more minerals. Doroteo Arango (best known as Pancho Villa) as well as other early revolutionaries such as Pascual Orozco made their living escorting gold and silver convoys through the Chihuahua mountain ranges.
As Mexican writer Jesus Lemus states, after the Revolution and during the never ending PRI regime, the Mexican mining industry didn't stop, but became stagnant in time, always dependent on the rules and whims of a corrupt and violent political leadership. But at the same time the concession of Mexican soil for foreign mining excavation skyrocketed as time went by. For example, president Lazaro Cardenas granted only 20 hectares of land for iron ore mining. Gustavo Diaz Ordaz granted 248 hectares of mining deposits in Michoacán. Jose Lopez Portillo gave 704 and Miguel de la Madrid followed him with 1,012 hectares in Michoacán. By the end of the PRI Ancient Regime under Carlos Salinas de Gortari, the privatization campaigns designed to lubricate NAFTA's institutionalization meant the disappearance of the state owned mining industries, which fell completely into the hands of the private sector. Thus, businessmen from Mexico itself, but also from the US, Canada and China acquired several facilities, concessions, and mines at bargain price. Not only did Salinas de Gortari dismantle the national mining industry, he also started giving mining concessions at an unprecedented level, he granted 7,054 hectares in Michoacán alone. But Salinas de Gortari is left as an amateur if we compare his mining concessions to those granted by his successors. Ernesto Zedillo granted 19,206 hectares, Vicente Fox 380,709 and Felipe Calderon granted 897,735 hectares. By 2017 Enrique Peña Nieto had granted 70,000 hectares of land for mining purposes.
Nowadays the mining industry still is vital for Mexico. Although not as important as the oil industry (which still is owned almost entirely by the Federal Government) it represents a fundamental sector for several states where heavy deposits of certain minerals are located.
Mexican mining industry is perhaps one of the most diversified of the whole Latin American continent. According to 2018 data published by the Mexican Mining Sub secretariat dependent on the Economy Secretary, Mexico produces at least 37 different types of minerals, from the most common ones such as gold, silver or iron ore to strange ones such as Celestite, Diatomite or Zeolite.
Needless to say, the mining industry is so important for Mexico because it grants job opportunities both to the formal and the informal economies, thus creating zones and regions whose populations are dependent on the job market created by the foreign mining corporations to subsist. Because of NAFTA's structure and the current state of affairs in the industry, mining industries operating in Mexico extract from Mexican soil much more than what they leave in the country in terms of local investment and taxes (which they avoid through several means as we'll see in this article). Of course, such an economic sector couldn't go unnoticed for certain organized crime groups.
During the early 2000s, as the drug trafficking organizations expanded all throughout Mexico. Engaging in violent turf wars against the others, they soon started diversifying their sources of income. Each criminal group started extracting rents from the sectors they could control the easiest: extortion, prostitution, oil theft, kidnapping, migrant smuggling, etc. And of course, it was only a matter of time before certain groups started permeating the mining industry. The narcotization of the mining industry happened differently depending on the regions where the mining operations were located and didn't affect the whole country uniformly. In fact, if we want to venture where the drug trafficking organizations started exploiting the mining industry, we should look at Michoacán.
THE BEGINNINGS OF A THRIVING INDUSTRY
Michoacán has traditionally been the Mexican State where the production of iron ore is located. Lately it has been surpassed by its neighboring State of Colima with 266,172 tons of mineral, but Michoacán still is the second entity with the biggest iron ore production: 203,959 tons according to INEGI data from April 2020. In fact, one of Michoacán's biggest industries (excluding the avocado plantations from the Tierra Caliente) is the mining sector. It has been traditionally the state where the biggest mining corporations established as early as in the 1980s, and by the 2000s Michoacán had already several open-pit mines awarded to some of the world's biggest mining corporations. In fact, nowadays at least 15% of Michoacán's surface (8,800 km² approx.) is under a mining concession. At the same time Michoacán has been one of the main centers for illegal drug trafficking as well as drug production (mainly synthetic drugs, but also marijuana and poppy). Organized crime in Michoacán is not a novelty at all. We can trace back the roots of a flourishing marijuana trade to the 1960s and 1970s. By the 1980s the Valencia family, a family of successful avocado growers, started importing large quantities of cocaine. The Valencias constitute the roots of what would be later be known as the Milenio cartel which by the late 1990s was already producing large quantities of methamphetamine in the interior of the State. The Milenio cartel, led at the time by Ignacio Nacho Coronel Villareal, fell in the hands of the Sinaloa cartel when they suffered the frontal attacks of Los Zetas cartel which at the time was penetrating into Michoacán by orders of their bosses from the Gulf Cartel. At the same time some local people initially employed by Los Zetas became independent and with the aid of local and independent criminal cells constituted what with time would be La Familia Michoacána, led at the time by Nazario Moreno Gonzalez aka El Chayo, Jose de Jesus Mendez Vargas aka Chango Mendez and Servando Gomez Martinez aka La Tuta. The Familia Michoacána expanded very quickly through the whole State of Michoacán in part because of the confusing ideology they portrayed. A rare mix of basic social rules mixed with exaggerated religious rituals and manners that gained the attention, respect and fear of most people within the state. But at the same time they opposed the violent expansion methods used by Los Zetas. La Familia Michoacána started very silently to monopolize the production and exportation of crystal meth to the US.
The violence and absence of the state were so huge that we could say that it was in Michoacán where the war against the cartels of President Calderon (he himself a Michoacáno) started in December 2006 with the Operativo Conjunto Michoacán when 4,260 army soldiers, 1,054 elements from SEMAR, 1,420 Federal Police and 50 agents from the Attorney General's Office (PGR) were deployed in an effort to annihilate the increasingly powerful Familia Michoacána which was waging a war of extermination against Los Zetas.
Thus, since the end of 2006 the presence of the Mexican Federal Government through the Policia Federal, the SEMAR and the SEDENA increased notably. It was in this context that La Familia Michoacán got involved in the mining sector. Nevertheless we can find earlier evidence about the Familia's involvement in the Michoacán iron ore mining industry. For example, according to Mexican writer Jesus Lemus, Nazario Moreno González and his followers started extorting the mining corporations in Michoacán as far as in the 1990s. They would have started by controlling territories where mineral deposits were known to be located and once a certain mining corporation was awarded with the concession to exploit the area, Nazario Moreno and his group would show up demanding a certain quota for each ton of mineral extracted from the mine. According to Lemus by 1998/2000 Nazario Moreno and the roots of what would be La Familia Michoacána were operating directly at least 200 of the iron ore mines in the Tierra Caliente region and from the other 926, at least 60% of them paid extortion quotas.
GETTING INTO BUSINESS
It's almost impossible to know exactly when the predecessors of La Familia Michoacána got involved in the mining industry, but when the war on drugs was officially declared by the Calderon administration in the late 2006 FM was entrenched very deeply into the Michoacán mining industry.
By this time organized crime involvement in the Michoacán iron ore industry was an open secret, but nobody had dared to verify it and publicly no one confirmed this fact. The first time the public got official confirmation about La Familia Michoacána being directly involved in the iron ore business was in 2010. Previously, in 2008, the National Chamber of Commerce and Steel had detected high quantities of iron ore and other minerals being extracted illegally from Michoacán open pit mines. But in October 2010, after an undercover operation conducted by Mexican law enforcement, Ignacio Lopez Medina one of La Familia's biggest financial operators and La Tuta's personal money launderer, was caught in Michoacán.
As the authorities said Lopez Medina was in charge of laundering the profits the Familia Michoacána obtained from drug trafficking, kidnapping, extortion and the illegal sales of natural resources. As it quickly became known these natural resources were high quantities of iron ore which the Familia Michoacána obtained illegally either through illicit mining operations or by stealing it from licit mining facilities. As it was claimed by the authorities, Lopez Medina was La Familia's contact with three unnamed Chinese mining export companies which had shipped nearly 1,100,000 tons of iron ore of unknown origin.
The origin of this incredibly high amount of iron ore could be found in the mining operations conducted by La Familia in the interior of Michoacán which at the time was selling illegal iron ore to Chinese export firms at a rate of $38 per ton. In fact it was estimated that La Familia Michoacána had earned $42,000,000 only that year with this activity.
By the 2010s the Familia Michoacána was so involved in the iron ore trade that they became a headache for some of the biggest mining corporations of the region. During the 2000s, when some of the companies started operating in Michoacán they had to negotiate with local communities which owned most of the land under which the minerals were located. After the Mexican revolution the Government in an effort to avoid the reemergence of the land distribution problem which had caused the conflict designed a land distribution system known as ejido. According to this legislation certain parts of the Mexican soil were parceled and distributed to peasant communities throughout the country. These people, known as ejidatarios, couldn't modify or sell the lands which would be theirs indefinitely in order to avoid the concentration of land in the hands of a few land owners. Although modified on several occasions the ejido system still applies in much of Mexico´s peasant regions. Thus, when a mining corporation is granted a permission by the Government to operate a mine located under ejido lands the law forces the corporation to reach an agreement with the ejidatarios. The problem is that the law doesn't stipulate any conditions this pact must reach and this has given rise to multiple frauds and cheats being committed against the ejidatarios, which are paid poorly or even threatened with the use of force in order to remove the populations and start the mining works as early as possible.
As Jesus Lemus points out some of the mining corporations tried initially to offer moderate sums of money (in the range of 200,000 MXP each year) to the ejidatarios, trying to trick them with quantities they hadn't seen before. The problem with this system wasn't only the vulnerability of the ejidatarios but the opportunity given to criminal groups for obtaining profits easily and quickly. Thus, some criminal groups started extorting not only the mining corporations but also the ejidatarios which were the legal owners of the minerals being excavated.
For example, the community of Aquila Michoacán has suffered repeatedly the insults and crimes of the mining conglomerate Ternium, which belongs to the Italo Argentinian steel holding Techint with operations in the United States, Mexico, Guatemala, Colombia and Argentina. During the 1990s Hylsa SA, a steel corporation from Monterrey obtained a concession for exploiting 300 hectares of land in Aquila. By the 2000s Hylsa SA had been absorbed by Ternium, which invaded 200 new hectares without even consulting with the ejidatarios. A protest movement led by a man called Jose Ramirez Verduzco started demanding a better agreement, Ramirez Verduzco was killed and the movement died instantly. By 2004 a new group was formed trying to get better payments for the 467 community members. Ternium's answer was to bribe 40 of the members, trying to deflate the movement. The third time in 2011 the Aquila population tried again to renegotiate their deal with Ternium. They organized a strike which lasted three months until the Federal Police came to Aquila trying to break the strike. Finally, in March 2012 they reached a deal and Ternium agreed to pay $38 per ton of iron ore extracted from the mine. Ternium not only broke the deal immediately but in April said on local radio stations that they were paying 18,000 MXP per month to each inhabitant of Aquila. This announcement attracted immediately the attention of a local cell of the Knights Templar (La Familia's successor since 2011) which started demanding payments of 2,000 MXP or more from each inhabitant monthly.
Nowadays Ternium operates two big mining complexes in the region. The Las Encinas complex is comprised by the open pit mines of Aquila in Michoacán, Palomas and El Encino in Jalisco, as well as a pelletizing plant in Cuauhtemoc and a shipping plant in Tecoman, Colima.
Ternium also operates 50% of the Peña Colorada complex comprised by an iron mine in Minatitlan and a pelletization plant in the port of Manzanillo, Colima.
As we can see the mix of mining corporations with 19th century economic strategy and a great number of defenseless and weak ejidatarios made the Michoacán iron ore industry the wet dream of the voracious organized crime sector with a never ending appetite for profit. Between 2007 and 2009 La Familia Michoacána infiltrated much of the ejidatario's groups, negotiating payment agreements with the mining corporations in the region.
THE EMERGENCE OF THE KNIGHTS TEMPLAR
By 2010 the Familia Michoacána brand was practically burnout. The constant infighting with Los Zetas for the resources in the region had transformed Michoacán into a living hell. In fact La Familia Michoacána became more ruthless and violent across time. On September 16, 2008, in the Melchor Ocampo square in Morelia (the capital of Michoacán) someone detonated two fragmentation grenades in the middle of an 18,000 people crowd while the Governor Leonel Godoy was presiding the Independence Day ceremony. 7 people were killed and nearly 130 were injured. The action was later attributed to La Familia Michoacána which had wanted to blame Los Zetas for the incident. The constant number of atrocities, ambushes against law enforcement convoys and the systemic reign of terror which fell over Michoacán apparently ended by December 2010 when the Policia Federal assured they had killed Nazario Moreno (La Familia's undisputed leader)
Only three months later, on March 11 2011, several narcomantas were hanged from bridges in Patzcuaro, Morelia and Zitacuaro saying: From now on, the same protection service will be delivered in order to avoid other groups penetrating into Michoacán territory. This was the first public appearance of Los Caballeros Templarios cartel, probably one of the most ruthless criminal groups of all Mexico. In less than 3 years the Knights Templar would become the undisputed kings of Michoacán, making of the state their fiefdom. They started extorting the avocado and lemon industry, the prostitution rings in the medium and big towns, the kidnapping sector and perfected their expertise manufacturing synthetic drugs (which they exported to the US in high quantities). And they continued with the mining industry their predecessors had founded, only they would lead the industry beyond any rational limits, to such an extent that the town of Lazaro Cardenas, their center of operations, would become known as El Trono de Hierro del Narco (the Narco's Iron Throne).
By 2011, when the Knights Templar replaced La Familia Michoacána as the main group in Michoacán, their involvement in the mining industry had gone so far that they didn't only extort the ejidatarios and the mining corporations operating in the region, but they became miners themselves. It has been accepted by several parties (including the Mexican Government) that at some point in time the Familia Michoacána first and the Knights Templar later acquired heavy machinery and start managing their own open pit iron mines.
This ultimate narcotization of the mining industry coincided in time with an extraordinary boom in the Chinese imports of iron ore, which they needed for crafting the steel being used in the massive projects being built all along the eastern coast. In March 2005 an iron ore metric ton was valued at $65, by January 2007 the price had escalated to $78, but by November it had reached the astronomic price of $195 dollars per metric ton. By June 2009 the price had plummeted to original levels at $71,66 per ton, but by February 2011 it had escalated to $187 again. These historic iron ore prices made Chinese companies search even under the rocks for iron. In their frantic search they bought not only legal mineral, but also looked for cheap and dark offers and in this point they made contact with the Michoacán criminal groups.
After the US Government made the ability increasingly difficult to obtain chemical precursors due to the passage of the Combat Methamphetamine Epidemic Act of 2005 and similar legislation. Mexican criminal groups found it difficult to obtain chemical precursors from the domestic legal market where the precursors were mixed with several common used medicines. Thus, they turned to Asian chemical developers in their search for precursors such as pseudoephedrine. Since a long time ago an increasing number of authors have speculated with the fact that certain Mexican criminal groups have ties with several Chinese criminal organizations which provide them with the precursors necessary to produce methamphetamine. Although this is true (in fact they not only provide Mexican criminal groups with precursors but also launder some of their money through trade-based money laundering operations) the Chinese precursor providers aren't exclusively criminal organizations. It has been demonstrated without doubt that certain Chinese export corporations which operate legally buying iron ore in Mexico and exporting it to China, exchange chemical precursors for the mineral. Although the details of this kind of exchange still aren't very clear, it is a fact that between 2007 (when the iron ore market boomed) and 2014 (when the Knights Templar local emporium was demolished and the prices of iron plummeted) several Michoacán based criminal organizations supplied a dozen of Chinese exporters with hundreds of thousands of tons of iron. In exchange the Chinese exporters, who had contacts with Chinese based laboratories and the logistics the operation required, imported tons of chemical precursors that the Mexican groups were desperately searching for. Where did these high quantities of iron go? According to several sources the destinations of the mineral were both China (specially the ports of Qingdao and Tianjin) and South Korea.
There are some mysterious Chinese exporting/shipping and mining companies that became very buoyant during these golden years of the iron ore trade, buying iron ore from anyone who wanted to sell it without asking question and offering instant cash payments. Companies such as Shenzhen Golden E-Fast Technology Co. Limited, Zhejiang Losun Holding Group (a Chinese steel corporation), Sunju Mining and Resources SA de CV, Liming Heavy Industry (a rock crusher maker) or Zhong Ning Mining Investment are some of the names usually mentioned by journalists and writers trying to bring some light to the obscure relationship between Mexican organized crime and the Chinese corporations who provide them with chemical precursors. It must be pointed out that some of these Chinese companies (as well as other big mining corporations such as Ternium) created their own private militias to protect their investments. These militias started recruiting local people and provided them with weaponry for which they obtained licenses issued by the SEDENA. It has been stated by a lot of sources that these militias (some of which later merged with the Autodefensas group and the Policias Rurales Comunitarias) became involved in high profile criminal activities such as extortion, theft and kidnapping.
By 2013 the mining activities of the Knights Templar were so expanded that they started stealing directly from the biggest players in Michoacán, the international mining corporations. This doesn't mean that before 2013 the criminal groups of the area didn't steal mineral and land from the mining corporations, but the firms tolerated such actions treating them as an invariable cost linked to doing business in Michoacán.
For better understanding how La Familia Michoacána first and the Knights Templar later introduced themselves in the extraction and commercialization of iron ore we must first understand how the steel is made.
Steel production is a long and highly complicated process that requires highly developed infrastructure and a never-ending list of resources. The process begins in the open pit mines were tons of rocks are obtained through the use of explosives placed in strategic locations.
These rocks are loaded in trucks and brought to the trituration plant. There the rocks are triturated(reduce size of a substance by grinding) three times. Before they're triturated for the first time the rocks are approximately 40 inches long and after being triturated the resulting rocks have been reduced to 8 inches in size with an iron ore purity of 20/55%. Then they're triturated for a second time after which they're 2,5 inches in size with a purity of 35/40%. After the third and final trituration they're 0,75 inches with a purity between 36% and 40%.
The resulting product is brought through conveyor belts to the concentration plant where the sterile material is eliminated through a series of filters and water pumping mechanisms reaching an iron ore purity of 66% in the form of a semi-liquid pulp that is redirected through a pipeline to the pelletizing plant. The pelletizing process happening here is fundamental in the manufacture of steel. The pulp obtained in the concentration process is mixed with other materials and a special machinery uses this sort of clay for producing hundreds of thousands of pellets which are small balls of 1 centimetre of diameter that are then cooked in an oven for making them more consistent.
These pellets are then transported with trucks to a blast furnaces where they're mixed with other materials and then exposed to extremely high temperatures reaching 2200ºC(3992°F). The resulting melted solution is sifted to collect the steel that is then converted through casts into bars. The bars then exported to places where they'll be used for further production of objects and materials.
This complicated process happens in several parts of Mexico. In certain places we have the open pit mines where the raw iron ore rocks are obtained and which are operated by dozens of companies, some of them big such as Ternium or ArcelorMittal and some others little or small mining corporations which sell their production to the local giants or export them abroad (as the Chinese do). Then we have the places where the rocks are triturated, normally in facilities very close or attached to the mines. The pelletizing process happens in special facilities in the port of Manzanillo or near the town of Cuauhtémoc in Colima. Finally the melting process when the steel is finally produced happens in the steel plants of ArcelorMittal in the port of Lazaro Cardenas, in the town of Celaya, Guanajuato and in Ciudad Obregon, Sonora.
We must ask ourselves at which point of this production process the penetration of organized crime happens. Of course the involvement of Mexican criminal groups takes place at a certain moment and then exits this production chain. In other words, Mexican cartels do not produce steel, they don't operate the steel plants. So when do they appear in scene?
Mexican organized crime is involved in the early stages of the steel production. Specifically the extraction and commercialization of raw iron ore rocks. Although there are rumors about the Knights Templar and the CJNG being involved in the commercialization of iron pellets this would require a direct collusion between giants such as ArcelorMittal and Ternium (operators of the pelletizing plants) with organized crime. Although there is a possibility and it wouldn't be difficult for Tierra Caliente criminal groups to use their logistical networks to transport iron pellets directly from the pelletizing plants. There still isn't enough evidence to support the claim that criminal groups in Colima, Jalisco and Michoacán are involved in the commercialization of iron ore pellets.
But Mexican organized crime is certainly involved in the extraction and transportation of iron ore. This happens in several ways and extends to every single iron ore producer, from the bigger ones to the humblest iron miners. By 2012 the involvement of the Knights Templar in the iron ore industry had merged completely with their massive extortion networks at which point both activities, mining and extortion, became intertwined.
In fact, there were three methods used by organized crime in the States of Jalisco, Colima and Michoacán for exploiting the mining industry:
Impose a quota for every ton of rock extracted from a mine. There's confusing data about this tactic because the extortion quota that are being reported differ greatly. For example, according to some sources by 2013/2014 the Knights Templar were taxing $2 for each ton being obtained from the mines. According to other sources the same group would be extorting massively the miners employed in the illegal mines opened near to the official mining concessions. These illegal entrepreneurs make a living by extracting iron ore illegally and then selling it at a discount rate to big commercialization firms. By 2013 the Knights Templar would be demanding 50% of the utilities obtained by these little producers.
This kind of extortion became highly lucrative since due to the iron ore boom of 2007/2008 some Michoacan businessmen started acting as private investment funds by contracting with local little and illegal mining communities offering them lucrative prices for an illegal product which they later processed and sold to foreign iron buyers (such as the Chinese companies) for a price varying between $50 and $56 per ton when the real prices reached nearly $3 per ton if sold in the legal market. This type of market offered clear advantages to criminal groups which could have either extorted these investment funds or directly taken control of them.
Force the mining corporations to use the logistical routes and heavy machinery owned by organized crime linked individuals. There's tangible evidence of several criminal groups buying or stealing bulldozers, trucks and backhoes which are used for operating illegal mines opened next to licit open pit concessions. Some sources indicate that the Knights Templar have forced certain mining corporations to hire their services for transporting and extracting some of the iron ore being extracted from the mines. This behavior is very similar to the strategies used in Italy by the Sicilian Cosa Nostra or the Calabrian N´drangheta which are deeply involved in the public works industry at which they force building firms to subcontract their services either as workers or through machinery in order to disguise their extortion. In this case the mining corporations would be using the transportation equipment and routes used by organized crime which would in return keep a certain part of the mineral being transported as payment.
The criminal groups operate their own mines. Either in territories where the soil has been granted in the form of concession or in zones were there's no concession available but minerals have been discovered. There's no one who dares opposing groups that start excavating large areas after burning the ground and displacing the communities to removing any obstacles.
The criminal entities directly penetrate the extracting zones managed by mining corporations and steal vehicles loaded with minerals or use their own infrastructure to steal mineral being stored in the area
Through these means the Knights Templar possibly became one of the biggest iron ore producers of the region. They obtained the iron ore in its primary condition either from direct extraction or through theft. Possibly also managed to triturate it using rock crushers they owned or stole from licit businesses and then redirected it to the Port of Lazaro Cardenas. At which point they stored it until Chinese ships came delivering chemical precursors or caches of weapons. The Chinese, loading up the iron ore and heading back to Asia.
2013 is the key year for the illicit iron ore trade in Michoacán. By 2013 the inflated prices of the late 2000s were gone, in fact the iron price was falling, but the extractive and predatory industry created by La Familia Michoacána continued and improved by way of Knights Templar. Who were so deeply rooted in Michoacán that they couldn't do anything but flourish in an atmosphere where criminality stood against no opponent.
Between 2007-2014 the Port of Lazaro Cardenas was one of the biggest smuggling locations of the whole world. Until 2008 the Port of Lazaro Cardenas channeled only 1.5% of the Mexican iron ore exports to China, but by 2013 (in a time lapse of less than 5 years) the Port of Lazaro Cardenas was exporting nearly 50% of the national iron exports to China. This means that the port became the main hub for iron exports of the country and one of the biggest of the continent. Undoubtedly, a great deal of this trade was legitimate, but there's no doubt that another great part of it was illegal, and in fact there are certain hints suggesting that the illicit iron ore trade represented if not the majority at least 40% of the whole local market.
Between 2008 and 2012 the illegal iron export for China accounted for 5 million metric tons, but by 2013 the Knights Templar were exporting 10 million metric tons of iron ore each year. Alfonso Alcira, president of the CANACERO estimated that the losses derived only from theft (not counting the amount of iron being extracted from illegal mines) accounted for at least $1,000 million, while the theft of vehicles loaded with mineral caused losses of more than $300 million.
The continuous rosary of robberies detected by the big mining concessions increased until reaching a point where the limit between assumable cost and painful loss became unclear.
Each week, with increasing frequency, more and more trucks penetrate the facilities of ArcelorMittal, Ternium and other mining companies demanding a certain load of mineral or directly taking it from the warehouses without asking any question.
By 2013 the situation was so deplorable that some people start complaining publicly. This is what Virgilio Aquileo Jesus Camacho Cepeda did. Camacho Cepeda was director of Institutional Relations at ArcelorMittal, the world's largest steel company. They've had an important presence in Michoacán since 1992, employing 8,000 local workers. As Guadalupe Correa Cabrera states, by 2014 ArcelorMittal was responsible for 6% of the global steel output and its Michoacanese facilities provide nearly 5% of the steel used by the corporation. Throughout the years ArcelorMittal has become one of the main steel makers of Mexico. According to their own data they operate two mining concessions in the region; the mining complex of Las Truchas in Michoacan and the Peña Colorada complex (which includes open pit mine in Minatitlan and pellet plant in coastal port of Manzanillo) in Colima that is owned in a 50/50 split by Ternium and Arcelor Mittal.
They also own a steel plant located right in the middle of the Port of Lazaro Cardenas which is 1,000 hectares in size (approximately three times the size of New York City's Central Park). It is Mexico's biggest consumer of both electricity and gas.
Of course, ArcelorMittal's operations located in the heart of the Knights Templar emporium couldn't go unnoticed and the cartel started robbing and stealing the company’s land, minerals and equipment with an incredible ferocity. The main tactic of the Knights Templar was to appear in zones being under ArcelorMittals mining concession, stating who they were and then expelling the company's workers and engineers. They would then bring their own machinery and start operating the mine themselves.
On July 2010 Arcelor Mittal filed a criminal complaint for the invasion of a zone under concession known as Mina de Cata. In August of the same year agents from the Federal Police and the AFI raided the place and captured 60 workers as well as heavy machinery, trucks and drivers. All belonging to a Nuevo Leon based mining company whose managers vanished into thin air. Virgilio Camacho Cepeda appeared in front of the cameras and stated that ArcelorMittal was suffering from robo hormiga (ant robbery) from people who went inside the open pit mines and collected iron ore mineral before it was even crushed. He also stated the destination of the minerals was China. Who found it cheaper to ship directly to Asia tons of iron ore in raw form inside containers rather than buying the processed material from legal producers.
On April 8, 2013 Virgilio Camacho Cepeda disappeared and was found one day later in the town of Las Guacamayas with a bullet to the head. By October 2014 three men (one of them a Knights Templar financial operator connected to Servando Gomez Matinez aka La Tuta) were apprehended and charged with the murder. Which they said was committed because Camacho Cepeda had refused to buy resources (iron ore we must presume) of questionable origin.
The death of Camacho Cepeda marked the culmination of a period of incredible profitability for the illegal iron trade in the State of Michoacán. Apparently, ArcelorMittals owner Lakshmi Mittal met with president Peña Nieto to study the consequences of the killing and tell the leader about the problem organized crime had become for the steel industry in Michoacán. But Peña Nieto had bigger problems at the time in Michoacán than the involvement of the Templars and other groups such as the CJNG, who by 2013 had become an independent entity operating both in Jalisco and Colima. During February 2013 the lemon producers of the Michoacán town La Ruana, led by Hipolito Mora, had taken arms against the widespread extortion campaign being conducted by Knights Templar. Almost at the same time the towns of Tepalcatepec, Buenavista Tomatlan and Aptazingan formed their own self defense groups led among other by Juan Jose Farias aka El Abuelo, Jose Manuel Mireles and Estanislao Beltran aka Papa Pitufo among others, they branded themselves as autodefensas. The autodefensas started battling Knights Templar cells in Tierra Caliente very effectively. Soon a certain type of civic armed revolution was spreading all around Michoacán against Templarian dictatorship. Nowadays we know that certain parts of the autodefensa movement were financed and armed by the CJNG (which was trying to recover some of the Valencia's original territories) through some self defense leaders such as El Abuelo (who nowadays runs his own Tepalcatepec Cartel) and the Sierra Santana brothers (who nowadays are the leaders of Los Viagras gang). But we must acknowledge that most of the autodefensa movement was lawful and fighting for legitimate causes.
This uprising was the straw that broke the camel's back for the Peña Nieto administration. The continuous number of massacres perpetrated by Knights Templar in efforts to hold a monopoly over extortion, the rising of autodefensas groups in Tierra Caliente and systemic erosion of the mining industry by organized crime. All forced the Peña Nieto Administration to dramatize his response and on early November 2013 the Mexican Army arrived at the town of Lazaro Cardenas. Gathered the 113 local policemen, disarmed them and sent them off to some sort of camp to be retrained. The SEDENA took control of the port replacing the local management company (Administracion Portuaria Integral) with army personnel led by Admiral Jorge Luis Cruz.
Although the Knights Templar had to fight now against three major rivals (the autodefensa movement, Government forces and the invading CJNG who was pushing in the east and south from Jalisco and Colima), the iron ore trade continued as vigorously as before. As evident by the futility of the Port of Lazaro Cardenas militarization, on March 3 2014 federal and state authorities made an astonishing discovery. On 11 different silos located at the Port of Lazaro Cardenas (which was under army surveillance) they seized 119,000 tons of iron ore of illicit origin as well as 129 heavy machines including trucks, bulldozers, backhoes and rock crushers which had been imported without license.
According to La Jornada newspaper, the silo known as El Sauce 85 had tons of iron ore and 27 machines seized. In the Golden Container Yard silo they found 6 machines, in Las Parotas 3,500 tons of iron, in El Uno 14 machines and 24,5 tons, in Global Shipping one machine and 50 tons, in Palos 3 machines in Zacatula 25 machines and 45,000 tons, in Manantial 11 machines and 40,000 tons, in Pwi Zhong 21 machines and 60,000 tons, in Eagle Rock Mineral 8 machines and 7,500 tons and in the silo known as Emma they only found iron ore residuals.
In addition to these findings, the National Institute of Migration found 6 Chinese nationals with no legal residence permits who had come to Mexico illegally in order to monitor the shipping of iron ore from the port to China. Their names were: Yansheng Sun, Jing Li, Langmeng Li, Hongzeng Wang, Jun Jie Pan and Mianmin Li. Who these people were and what they were doing in the town of Lazaro Cardenas won't ever be revealed. All this happened right under the nose of the Mexican army which was supposed to monitor the port's daily operations and traffic.
THE DEMISE OF THE KNIGHTS TEMPLAR
By mid 2014 Knights Templar were in the sight of the Federal Government. Due to their erratic campaigns of violence and their innate need for extorting any kind of economic activity performed in Michoacán, they won the hate of most of the Michoacán population, which not only denied them shelter but supported ostensibly the autodefesa movement. On April 6th Knights Templar lost a great ally in the local Government when then Michoacán Governor Fausto Vallejo renounced (from the detention of Jesus Reyna) his personal secretary and as Governor himself any links with the cartel. A few months later a video appeared on the internet showing Vallejo's son Rodrigo chatting with Servando Gomez Martinez around a table, the cartel's main leader.
Simultaneously the leaders of the Knights Templars had been perfectly identified (mainly because of their strange necessity of appearing constantly in social media videos portraying themselves as the leaders of the criminal group). On Jan. 27 2014 the Policia Federal arrested Dionisio Loya Plancarte aka El Tio, one of the two main leaders of Knights Templar in Morelia. On March 9 2014, Nazario Moreno Gonzalez aka El Chayo, the original founder of La Familia Michoacana and the creator of the narco-mining industry was finally gunned down in the town of Tumbiscatio. He faked his death in 2010 and had remained 4 years in the most absolute obscurity directing the Knights Templar using other bosses as front men.
Then on March 31 2014 Enrique Plancarte Solis aka Kike, Dionisio's nephew, was killed by SEMAR in Queretaro. And finally, on February 27 2015 Servando Gomez Martinez aka La Tuta, the Templar's most known figurehead was captured.
By the end of 2015 the Knights Templar cartel had been completely defeated. Its market niches, infrastructure and products (methamphetamine production mainly) fell into the hands of the various organizations that replaced them as Michoacáns new criminal actors; Cartel de Jalisco Nueva Generacion (who was the great winner of the Templar´s demise) as well as Los Viagras of the Sierra Santana brothers. As well as a couple autodefensas groups which recovered some of the Templar's main sources of revenue (poppy/marijuana cultivation and extortion mainly). In fact these were the autodefensas that continued with the extortion of mining corporations established in Michoacan. By 2014 some of corporations were paying at least $2 per ton to these irregular armed groups.
THE CURRENT SITUATION OF THE INDUSTRY
This article analyzed the origins and structure of the thriving illegal iron ore market in Michoacán. Nevertheless the time span of this article comprises only 7 years, from 2007 to 2014. Although there's plenty of information about the Familia Michoacana and the Knights Templar involvement in the iron trade, there's virtually no available information about the current state of affairs. The demise and elimination of the Knights Templar as a criminal organization didn't mean the end of the illicit iron ore trade. Actually, the fact that a lot of local Templar cells joined the autodefensas or other criminal groups as well as the fact that Michoacán still is one of Mexico's most fiercely contested zones by some of the most ruthless groups (such as the CJNG, Los Viagras or La Nueva Familia Michoacana) means that an extremely profitable industry such as the iron ore trade must remain as one of organized crime's main sources of revenue in the region.
Some sort of radio silence policy has been imposed regarding CJNG's operations. Although there's plenty of information about its main leaders and origins, the current state of affairs inside the cartel is completely ignored. With the exception of certain specialized investigation sites such as BorderlandBeat, Insight Crime and certain Mexican publications virtually no one publishes information about CJNG's businesses, leadership or tactics. This is a very strange phenomenon in a country where powerful criminal organizations such as La Familia Michoacana, Knights Templar, Sinaloa Cartel, Los Zetas or the Gulf Cartel have been studied thoroughly by dozens of authors.
This leads us to the following question: who's currently in control of narco-mining in the states of Michoacán, Colima and Jalisco? In our opinion the obvious answer to this question is CJNG. Although in Michoacán we could easily find dozens of little actors (from autodefensas remnants to real criminal groups such as Los Viagras), it's undeniable that CJNG is the de facto owner of Jalisco, Colima and some areas of western Michoacan.
In fact there is old evidence of CJNGs involvement in the business. For example, according to available data, in 2013 CJNG was already stealing iron ore mineral from Termium mines. This company obtained 5,600 tons of iron ore daily from El Encino mine in the town of Jalisco. all the while CJNG was extracting 2,500 tons each day (nearly half of the legal daily production). In addition, the mine in Minatitlan of the Peña Colorada mining complex, Colima. Ternium produced 12,000 tons per day, CJNG extracting 3,200 tons on a daily basis. The minerals then transported to Port of Manzanillo to be sold for $40 per ton(a town under CJNGs iron fist) and from there shipped to China.
These are only two partial examples of a business that flourished during the 2000s. First as an extortion modality and then as a complement of the methamphetamine industry. And turned out to be one of the main sources of revenue for medium-size criminal groups. It's impossible that nowadays, in 2020, with iron prices more or less stable and state authorities weaker than ever. That CJNG, Mexico's biggest criminal operator, hasn't continued operating this lucrative and relatively risk-free business in the middle of its bastion.
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- - Lemus Barajas, Jesus. Mexico a Cielo Abierto. De Como el Boom Minero Desquebrajo al Pais
- - Lemus Barajas, Jesus. Tierra Sin Dios. Cronica del Desgobierno y la Guerra en Michoacan
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- - Subsecretaria de Mineria. Anuario Estadistico de la Mineria Mexicana, 2018