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Knights Templar Cartel Smuggling Iron Ore to China

May 7, 2014

Iron ore smuggling has become a concern of the Mexican government with the diversification of the Knights Templar drug cartel into mining operations in the western state of Michoacán.

Mexican authorities have seized nearly 200,000 tons of illegally mined and shipped iron ore headed for China so far this year. Last week a ship was seized carrying 68,750 tonnes ore of belonging to the Cartel. In March, government agents and military personnel seized 119,000 tonnes ore, along with heavy equipment, trucks, backhoes, conveyors, crushers, and generators. The ore was being stored in storage yards in the Port of Lazaro Cardenas and yards along the border of the state of Guerreo.

The Knights Templar Cartel began its relationship with China by importing chemicals needed to manufacture methamphetamine. The Knights started imposing protection charges on union workers moving ore from the mines and helping prospectors stake claims for a cut of the profits. Extortion and protection rackets evolved into eventual control over the entire mining chain, from mining to transportation. The Knights Templar move the ore through the ports by bribing custom officials and intimidating Chinese buyers.

The amount of iron ore exported from Mexico quadrupled between 2008 and the first half of 2013 to 4.6 million tons per year, coinciding with the entry of the cartels into the iron ore industry in Michoacán.

Associated Press reported in October that “residents hand over part of the royalty payments from a local iron ore mine operated by Ternium,” to the Cartel. Local officials say “everyone pays” but most are afraid to speak of the extortion for fear of reprisals. In April, an ArcelorMittal official was shot dead for allegedly reporting illegal mining activity. The Governor of Vallejo estimates the criminal enterprise in the region around Lazero Cardenas amounts to $2 billion per year.

The Knights Templar evolved from a split from the “narco-Evangelical”cartel, La Familla, in 2011. The Cartel takes its name from the medieval Catholic crusaders and has grown into the most powerful drug gang in Michoacán. The Cartel’s violence is at odds with its claim of being pious protectors of the community is and its code of conduct that purports to “fight against materialism, injustice and tyranny” and “protect the oppressed, the widow and the orphan.” The cult-like Knights Templar are known to wear white clothing with a red cross in imitation of their medieval namesake.