Mexico: The Iron Price

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September 27, 2014:   Cartel control over iron and copper mining has been broken. This became clear on April 30, 2014 when Mexican authorities seized the freighter Jian Hua, which was carrying 75,800 tons of iron ore. Investigators had discovered that the Knights Templar cartel had either illegally-mined, stolen, or extorted the ore from mines, miners and transport firms in western Mexico. Most of the mines and firms were located in the Michoacan state. Until November 2013, when the Mexican Navy took control of the port, the cartel had complete control of the Michaocan port of Lazaro Cardenas. Despite that Lazaro Cardenas was still the port of origin for the April 2014 shipment.  The freighter was seized as it entered the port of Manzanillo (Colima state).  How did the freighter manage to load the cargo and leave port despite much tighter inspection routines? Investigators now report that the export company handling the iron ore shipment falsified key information as to the source of the iron ore when it applied for the shipment license. In July security forces seized a large open pit mine in the state and shut it down. Since then various police and security agencies have closed other iron mines and seized several hundred tons of iron ore the government suspects has been illegally mined. The government began closing suspicious iron and copper mines in Michoacan state in January 2014. It has now all but shutdown iron mining in Michoacan state. Though this has harmed the state’s economy and thrown 6,000 or more miners out of work. The miners, their companies and some of the transport/logistics companies acknowledge that the government is finally trying to end the cartel’s “hidden control” of the industry.  The Knights Templar cartel may not have controlled each company and each mine, but it had positioned itself to take a percentage of almost every major iron mining and ore shipping operation in the state. The cartel infiltrated legitimate businesses and used physical violence (including torture) when honest businesses tried to resist. A ton of Mexican iron ore sells for between $105 and $110 a ton. Security officials and miners now report that the cartel was extorting from two to four dollars per ton of iron mined in Michoacan. One mining company official said that cartel gunmen used the phrase “interest on freedom” to describe their extortion racket. Another mining executive said that the cartel first threatened him in 2009. Government officials said that they intend to re-open the mines. There will be a new security routine and much tighter regulations. Miners and a mine workers union are complaining that the government is moving too slowly; people need jobs. Workers and companies say it appears that the government has no plan for selling the seized iron ore. Security officials indicate that there may be more seizures and more arrests.  (Austin Bay)

September 25, 2014: The government has arrested eight soldiers who were involved in the June 30 shootings in the town of San Pedro Limon. This represents a major change of heart by the government. As recently as September 20 the government claimed there was no evidence that the army committed any errors in the operation and shootout in San Pedro Limon. Further investigation of the unit, which had been accused of bad behavior in the past, proved that there was a problem.

September 24, 2014: The government has told the UN that Mexican military forces will participate in UN peacekeeping operations. Mexican police have participated in UN-backed security operations in El Salvador.

September 23, 2014: A federal legislator was ambushed and kidnapped on September 22 as he drove to an airport in Jalisco state.  Gunmen intercepted Gabriel Gomez Michel’s SUV and kidnapped the legislator. His partially-burned body was discovered in Zacatecas state on September 23. Authorities described the murder as an execution style murder committed by a criminal organization.

September 20, 2014: Critics are once again questioning the government’s version of a firefight between Mexican Army soldiers and alleged cartel gunmen that occurred on June 30 in the town of San Pedro Limon. A woman witnessed the murder of her 15 year-old daughter by soldiers. The mother says her daughter was wounded in or near the building where the gunmen were hiding (a warehouse). After the firefight some of the gang members surrendered. Soldiers interrogated them in the street then took them inside the warehouse and executed them. The mother says a soldier came to her wounded daughter who was lying in the street and shot the girl six times in the chest. One soldier was wounded in the firefight. Critics argue that the lack of military casualties is another indication that the incident is really an atrocity.  Government investigators and the federal attorney general’s office reported that they have no evidence which supports the accusations of murder, execution and atrocity.

September 19, 2014: Police in Michaocan state have recovered the corpse of Aquiles Gomez, a Knights Templar commander. Gomez ran drug operations (methamphetamines) in the state. He is the brother of Servando Gomez, the overall leader of the cartel. Authorities believe he was wounded in a firefight. His body was discovered in a house near the port of Lazaro Cardenas.

Police found six dead bodies in the town of Uruapan (Michoacan state). The Jalisco New Generation cartel claimed responsibility for committing the murders.  The murder victims’ heads were wrapped with duct tape.

September 18, 2014: Community defense militias in Baja California Sur state are conducting security patrols in their towns after Hurricane Odile struck the peninsula. The groups said they intend to prevent looting. Several looting incidents occurred in the town of San Jose de Los Cabos after the storm hit.

September 15, 2014: There has been a surge in the number of refugees from Michoacan state arriving at the U.S.-Mexico border. That’s right, refugees, not migrants. The refugees claim they are fleeing murder, extortion and violence at the hands of drug cartels.

September 11, 2014: FBI and other police agencies in Los Angeles, California have cracked a money laundering ring in the Los Angeles fashion district. Allegedly cartels have been using clothing businesses to launder drug money. Police raided over 50 businesses and seized $100 million in cash. Interestingly enough, only nine people were arrested. Local officials pointed out that the fashion and garment district has over 3,000 businesses.

September 8, 2014: There are rumors that the Los Zetas, Juarez cartel (Carrillo Fuentes cartel), Jalisco New Generation and Beltran Leyva drug cartels are discussing forming an alliance. The senior leaders in these cartels are believed to have met in the city of Piedras Negras (Choahuila state, Texas border) to discuss an alliance. Government officials have not publicly discussed the rumors. However, the Zetas and New Generation cartels have reportedly cooperated in several areas, so the rumors are not totally outlandish. Commentators speculated that Los Zetas would be the “lead organization” in the alliance. The super cartel would be able to challenge the Sinaloa cartel.

September 6, 2014; In July the U.S. Securities and Exchange Commission began probing accounts of two brokerage houses to determine if they had clients who were attempting to launder cartel drug money. SEC investigators speculated that the two brokerages had failed to adequately investigate client backgrounds. Investigators now believe that cartels used shell companies (cut-out companies) to invest money through the brokerage houses. One of the on-going cases involves a south Texas rancher who has caught transferring cash to a company with an account. The company turned out to be a fake organization.

September 3, 21014: Authorities have arrested two currents mayors and one former mayor in Michoacan state who have ties to organized criminal syndicates. Federal police arrested the mayors of Patzcuaro and Huetamo. The former mayor of the seaport of Lazaro Cardenas was also arrested.

September 1, 2014:  The Mexican Navy announced that it will continue to improve and expand its air fleet. By 2018 the service intends to acquire an additional ten Airbus AS565 MBe Panther attack helicopters. The helicopters will be used for maritime interdiction operations.

 

 

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