Blog dedicated to reporting on Mexican drug cartels
on the border line between the US and Mexico

Thursday, January 2, 2014

Chinese Iron Trade Fuels Conflict with Caballeros Templarios

Borderland Beat
“Because the Knights Templar control much of the local iron supply, the gang has pressured Chinese buyers to purchase ore from them or face reprisals…”
by Dave Graham for Reuters
When the leaders of Mexico and China met last summer, there was much talk of the need to deepen trade between their nations. Down on Mexico's Pacific coast, a drug gang was already making it a reality.
The Knights Templar cartel, (Caballeros Templarios)  steadily diversifying into other businesses, became so successful at exporting iron ore to China that the Mexican Navy in November had to move in and take over the port in Lazaro Cardenas, a city that has become one of the gang's main cash generators.
This steelmaking center, drug smuggling hot spot and home of a rapidly growing container port in the western state of Michoacán occupies a strategic position on the Pacific coast, making it a natural gateway for burgeoning trade with China.
Lazaro Cardenas opened to container traffic just a decade ago, and with a harbor deep enough to berth the world's largest ships, it already aims to compete with Los Angeles to handle Asian goods bound for the U.S. market.
But that future is in doubt unless the government can restore order and win its struggle with the Knights Templar, who took their name from a medieval military order that protected Christian pilgrims during the Crusades.
Mexico's biggest producer of iron ore, Michoacán state is a magnet for Chinese traders feeding demand for steel in their homeland. But the mines also created an opportunity for criminal gangs, such as the Knights Templar, looking to broaden their revenue base into more legitimate businesses.
"The mines were mercilessly exploited, and the ore was leaving. But not in rafts or launches - it was going via the port, through customs, on ships," said Michoacán’s governor, Fausto Vallejo, soon after the Navy occupied the port on November 4.
Already a thriving criminal enterprise adept at corrupting local officials and squeezing payments from businesses, developers and farmers, the Knights took to mining with aplomb, according to entrepreneurs and miners working around the port.
Hidden behind mountain roads about an hour from Lazaro Cardenas, one small town mustered hundreds of trucks this year to lead the gang's scramble to the port, a local miner said.

That town - Arteaga - is the birthplace of Servando Gomez, the former school teacher who leads the Knights Templar.
Gomez understood the potential of Lazaro Cardenas, which was a village best known for its coconuts until the government decided to build a steelworks there 40 years ago.
The gang's trucks sped around Michoacán’s iron mines to supply Chinese buyers, helping to push ore exports to 4 million tons by October from 1-1.5 million tons a year previously.
Their business rests on several pillars, according to accounts of local officials, miners and entrepreneurs.
Firstly, the Knights controlled how the ore moved, having imposed protection charges on local transport unions after becoming the dominant gang in the city a few years ago.
It also helped local prospectors stake claims to mine areas either unclaimed by others or beyond the control of the existing concession-holders. Then the Knights took their cut.
Finally, the gang pressured customs officials to ensure the ore passed through the port smoothly
"Most of the groups mining are Knights Templar or belong to them. They have the whole chain," a local official told Reuters.
Fueled by the appetite of Chinese buyers, about half the mining in the area was done without proper permits this year, said the official, speaking on condition of anonymity.
Those who talk openly can pay dearly. In April, an official at steel maker Arcelor Mittal who local businessmen said had reported illegal mining to authorities was shot dead.
One prospector from Arteaga, who asked to remain anonymous, said he ran a mine selling unprocessed iron ore to Chinese traders for $32 per ton, giving him a profit of about $5-7 per ton. By the time it reached China, the buyers could expect to sell the ore for a profit of around $15 per ton, he estimated.
Because the Knights Templar control much of the local iron supply, the gang has pressured Chinese buyers to purchase ore from them or face reprisals, said a Mexican government security official who spoke on condition of anonymity.
The combination of organized crime and Chinese buying of Mexican iron ore poses a problem for President Enrique Pena Nieto, who has gone out of his way to cultivate ties with China.
China's President Xi Jinping has been in office only since March, but Pena Nieto has already met him three times. In June, Pena Nieto welcomed Xi to Mexico, signing a string of economic cooperation deals. But at the top of the agenda was how to narrow the massive trade imbalance between the two nations.
Bilateral trade was worth $62.7 billion in 2012, up from just $431 million two decades ago, Mexican data shows. But 90 percent is accounted for by Chinese exports to Mexico, most of it goods such as computers and component parts.
Much of that trade goes directly through Lazaro Cardenas.
In 2012, it had the biggest rise in traffic in North America's 20 top container ports, handling 1.2 million 20-foot equivalent units, or teus.
Most of the port is still a dusty plain above which birds of prey soar in stifling heat. In a few years, though, projects started by Maersk-unit APM Terminals and Hutchison Port Holdings could expand its capacity to about 8 million teus - the amount moved in 2012 by the continent's top container hub, Los Angeles.
But Michoacán is not California.
Seven years ago, then-President Felipe Calderon began a nationwide crackdown on organized crime in Michoacán, sending in the army to tackle increasingly violent drug cartels.
Over half of the state lives in poverty. Traditional work like resin production is dying out due to competition from China and elsewhere. That creates new recruits for organized crime.
In October, a local bishop likened Michoacán to a failed state. A few days later, assailants temporarily knocked out power for hundreds of thousands in the state with a string of attacks on installations of the national electricity utility.
Many blamed the Knights, though signs posted in Michoacán accused a small rival gang of staging the attack.
The Navy took over the port authority and reinforced Lazaro Cardenas shortly afterward. All the local police and customs officials were initially suspended and the caravans of trucks carting ore started to thin out.
But the lull is unlikely to last unless the government can regain control of the city beyond the port gates and open up mining to legitimate prospectors not controlled by the gang.
Miners complain that the main concession-holders such as ArcelorMittal, which did not respond to requests for comment, use only a fraction of their land and are reluctant to let others mine it. The Knights have turned that dispute into money.
Days after the Navy moved in, state governor Vallejo said criminal enterprise around Lazaro Cardenas could be worth up to $2 billion a year - or about half Michoacán’s 2012 budget.
Some involved in the mining industry say the area has become safer since the Knights Templar started to take control.
But the facts suggest otherwise: government figures show kidnappings in Michoacán reached a record level in 2013, and murders climbed to a 15-year peak.
Gomez has appeared in several YouTube videos trying to portray his Knights Templar as defenders of Michoacán.
In one posted in August, he said the Knights had provided paid protection at the request of avocado farmers but that they did not extort businesses. However, he also conceded that some "foolish" members of his gang probably had engaged in extortion.
The Knights' power in Lazaro Cardenas is often subtle.
Unlike parts of northern Mexico living under the threat of violence, the restaurants, taco stands and bars on the city's main palm-lined boulevard are alive with people as night falls.
Some residents say they are not squeezed by the cartel, and big companies say they can operate without fear of extortion.
"We don't pay a cent to anyone," said Jose Zozaya, head of Kansas City Southern Mexico, which operates the rail link that connects the port with the United States.
But others quickly vent their anger about the Knights.
"Everyone is paying, but they won't tell you," said a local entrepreneur. "The people here are destroyed."
The port is no stranger to crime, and during Calderon's presidency it became a big entry point for chemicals from China and other parts of Asia used to make methamphetamine. Some locals say chemicals have even been used to pay gangs for the iron ore.
Asked if Mexico had discussed the iron ore issue with Beijing, a senior government official said: "The Chinese government doesn't always know what the companies are doing. The occupation of the port ... was the control measure adopted."
Hua Chunying, a Chinese foreign ministry spokeswoman, said she was unaware of the situation in Lazaro Cardenas, adding: "But I can tell you that the Chinese government has consistently educated and asked Chinese companies to respect the law in other countries when they carry out business and trade cooperation."
Since setting up in 2009, Desarrollo Minero Unificado de Mexico (DMU), a Chinese iron mining company in Lazaro Cardenas, has gone from three employees to 600 nationwide, nearly all of them Mexicans, Director General Luis Lu told Reuters.
With more than 30 concessions, Lu said his company mined all of its own iron and had not had any trouble with organized crime. He said he could not say how other Chinese firms fared.
Still, Chinese success in Michoacan has caused friction with the Knights Templar. In the August YouTube video, gang leader Gomez had some strong words for them.
"We have an excessive invasion of Chinese. An excess of Chinese," he said, surrounded by armed men. "It may suit the interests of various corporations, I don't know. But they're here with us now. And these people have their mafias too."


  1. This getting out off soon will be over.

  2. China is now the world's 2nd largest economy; thus, the Chinese corporations/govt. have money to spend to satisfy their insatiable
    hunger for natural resources. For that reason alone dealing with a criminal group like the Knight Templars would not for one moment deter them from purchasing ore on the cheap. Sort of like American companies obtaining stolen PEMEX fuel from CDG and los Zetas on the cheap. As an emerging superpower, China is also fostering/exploiting conflicts inorder to benefit its economy and geopolitical objectives. We as Americans can expect to meet competition/challenges in everything on a global scale as the Chinese economy/military expenditures continue to grow. The Knights Templars and corporate/govt. Mexico are ensuring that this occurs.

    1. Chicago Mayor Rahm Emanuel,a partner with valeo gas stations and car wash?
      Now,we know many of the pipe tanks transport drugs by the ten tons or more,like dick chaney's charcoal trains in northern Mexico move cocaine by the tons to California,or used to...
      It is really amazing how the greediest of the incompetent get to work in government to enrich their own arses,and do not give a flying fuck about the people that get fucked up on their way to the bank,covered by the mantle of impunity of national security (in the name of the pious republican Jesus).
      I guess being a CROOK is OK if you made tons of money off of it before you got caught...

    2. The Chinese don't bother about the environment,they say only 12% of Chinese land is pollution free,and the air is a total mess,that is why the american libertarians want a "smaller"government that they can buy and manage at will.
      Economic libertinism does not only affect the local populations,but the world's environment toot, which is everybody's concern, trickle down economics keep raining shit on all of us...

  3. How is it possible the Z's, Milenio, LFM whatever gang controlled the city didn't do this iron trade business, but these coked out Renaissance fan girls did is beyond me...

    1. Lazca knew about mining,being from hidalgo state,in coahuila,there are a lot of little mines too,and I am sure there is a lot of slave labor being used in mines all over Mexico,which the Christian right all over the world LOVES...
      there is not much being said about the privatization of the nationalized minning industry in Mexico,but it has happened,with the PAN taking the presidency,the Mexican people's patrimony got privatized with the money that had been stolen from the Mexican government owned industries,just what is happening with pemex,which is being privatized with a portion of the money stolen from it,and earnings from drug trafficking.the money Mexican politicians steal and put in foreign banks,come back as foreign "investments" that leverage the buyouts of the Banana Republics all over the way the US is becoming a banana republic,getting taken over by leveraged buyouts,imposed debt, meretricious deals,bought elections and politicians,flight of capital,self repressed media,religious fanatism,supremacist militias...we are lucky to still have the internet,if only because through it we can be spied on,no prom.

  4. I would think they will get only a small window of time for this scam especially since china is such an economic powerhouse and this may force epn into dealing with this because it is so obnoxious, but then again, maybe they will just use this opportunity to clamp down on the auto defences

    1. To exploit mining illegally,and to use slave labor,the sindicato de los trabajadores mineros metalurgicos y similares was taken over by the worst of the charro leaders,in complicity with the government,who sold away the nationalized mining industry to private concerns,at fire sale prices too,after stealing the production for years,making mining unprofitable and insolvent,much like the milking of pemex

    2. The Chinese have been working in secret with Mexican crooks for a looong time, remember that Chinese naturalized Mexican that the mexican government confiscated about 250 million dollars in cash from?and that was the spare change,his partners have not been exposed,either Mexican or Chinese
      And there are many other agent of foreign concerns fighting like bitches for their part of the Mexican cake that need to be brought up,at least we would like to know them...

  5. I wonder how so many foreign corporations see profit in Mexico,and they do progress and make tons of billions of dollars in profits, but the Mexican peoples,all they see is murder and mayhem and exploitation as prelude to the peaceful taking over of all the natural resources by presidential edicts,paid for by international concerns that delight in the use of communist slave labor that squeeze workers worldwide to the unemployment lines,and their nations to their knees,drowning in debt and bankruptcies,like the European Union and the US...somebody needs to wake up and smell the horse's ass!!!

    1. Beware of peeople that cook their deals in quiet dark rooms,as some vulture capitalist of recent memory likes to say,that way you people have to take what they give you,and their sanctimonious asses do not have to explain why money laundering is good for them,especially when they bring it back to your country as investment,buy your company and offshore your job to China.
      In spite of president Obama's fighting(not to win) for the people,it is not working,as per design,Johnny get angry,the song needs to be sung to the president,he does not need to look decent,educated or unflappable anymore,the PRESIDENT needs to be the leader we need,and stop being pushed over by the rightista nazi wing of American popo.

  6. If the Templarios start messing with the Chinese community expect the Triads to get involved at some point. The 14K vs. the Templarios--that would be an interesting matchup.

    1. Shut up.... I award you the "Dumb comment of the day" You're welcome.

    2. 14 k my ass you punks would never last. Like tuta said buy from us or face reprisals, it sounds like he is scared? your with us or your dead. Its more like those Chinnese investors or business opportunist need to back up with their absurd invasion or undoubtedly expect war.

    3. China will invade the us,and mexico.they may eventually kill off mexican and move 100 million chinese in there.during ww3

  7. Ct gonna extinct !

  8. Im la tuta and I aproove this message.

  9. El chino antrax been capture in europe

  10. Thank you to everyone for sending me the chino antrax story especially "Sam" for the link

    I have heard for 2 days but could not find a story until today,

    . Riodoce is the only source reporting it, but that is a pretty good source.

  11. They seized 3 tons meth in China:,0,2458230.story


Comments are moderated, refer to policy for more information.
Envía fotos, vídeos, notas, enlaces o información
Todo 100% Anónimo;