How Mexico's Cultish Cartel Got Big Into Iron Ore

What the pseudo-religious Knights Templar cartel earns pushing ditch weed is chump change compared to its mineral smuggling profits.

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Mar 17 2014, 6:20pm
Washed iron ore. Image: Peter Craven/Flickr.

For a long time, illegal drug sales formed torrential revenue streams for Mexican organized crime gangs. But that era is fading fast. Nowadays, the massive profits reaped by top-tier cartels come not so much from what can be grown in the dirt, as what can be extracted from the Earth. Specifically, iron ore. 

Take the Knights Templar, a pseudo-religious cartel named after one of the wealthiest and most powerful Crusades-era Western-Christian military orders. The Templars, whose turf covers much of the western state of Michoachán, have so diversified their portfolio over just the past few years that what the gang now earns from illegal mining and mineral smuggling makes its illegal drug profits look like chump change. 

We know the Templars have cornered the market on illegal mineral mining and smuggling, and that China is the prime recipient of the material shipments. What's been less clear is the true scope of the Knights' mineral monopoly. Hard figures—to say nothing of a formal admission from Mexico's government that drug running is just one spark in the engines of Mafia-style business—have been relatively difficult to come by. But the extent to which the Templars are laughing all the way to the bank is beginning to come into focus.

Iron ore is the Templars' "principle source of income," Alfredo Castillo, the Mexican government's special envoy tasked with restoring order in Michoacán, recently told the Associated Press. ‘‘They’re charging $15 (a metric ton) for the process, from extraction to transport, processing, storage, permits and finally export," Castillo added, in what's the first official acknowledgement from President Enrique Pena Nieto's administration that it's not just drugs, anymore.

That's not what the ore itself is priced at, of course. The Templars pinch $15 off every ton of the stuff that shows up in any of the known smuggling ports in Michoacán, according to the AP. To put this into context, only 1.5 percent of China-bound iron ore exports passed through Michoachán's Lazaro Cardenas port in 2008, by Castillo's count; by 2012, roughly 50 percent of iron ore exports to the People's Republic originated in that same port. So while $15/ton might not seem like much on paper, if Castillo's figures are any indication, it stands to reason that it's all adding up. Quick.

For its part, Pena Nieto's administration is taking pains to root out cartel's mineral smuggling operations. In early March, Mexican authorities descended on a major Knights Templar mineral smuggling operation in Michoacán, seizing 119,000 tons of materials (valued at $15.4 million USD), and over a hundred pieces of heavy machinery. Eleven clandestine mineral processing labs were also shuttered in the sweep.    

Nevertheless, you almost have to wonder why the Templars, together with Mexico's tech-savviest cartel, the Sinaloa, still meddle in drug trafficking at all. Why risk moving high-powered crystal meth into the US by the kilo, for example, when you can make a hell of a lot more money under the guise of legit enterprise? But then that's still the last mile of the Templar's global meth ring, which connects Guangdong Province and Gulfport, Mississippi, via the exchange of copious raw materials for meth precursor chemicals.

It all fuels the lore. Indeed, what the Templar's have gained in notoriety for their cultish overtones—members revere the late Nazario Moreno, the cartel's founding kingpin, as divine, and say they're guided by a 22-page code book of Moreno-isms that's shot through with images of  "cloaked knights bearing lances and crosses"—has only been compounded by the virtual monopoly on illegal mining that the organization enjoys.

Who's to say they won't drill their coffers even deeper? And right in the face of government pressure, no less. If the Zetas, their rivals to the east, can exploit Mexico's hydraulic fracking boom, then the Templars can entrench further in mine games to the west. Some of the 900 concessions that Castillo said the Mexican government has doled out to mine iron ore in Michoachán have to be ripe for takeover, right? 

Turns out it's God speed, in the literal sense, all the way down.