In an earlier post, I examined some of the cartel diversification (not all of it was new by any means) that would sharply limit attempts to combat the cartels by way of marijuana legalization. Here, we’re going to narrow the focus to a few players and incidents, as an illustration of just how complicated the situation in Mexico really is, as well as how looking at the situation in a vacuum of “U.S./Mexico” is a grave error.

Everything is not as disconnected as it may seem.” —Coriolanus

As mentioned previously, the Caballeros Templarios, and their predecessor organization, La Familia Michoacana, have been dealing not only in drugs, but in illegally mined iron ore. They have either been levying fees on any shipments passing through Michoacan to the Pacific ports, stealing the ore and shipping it themselves, or even illegally mining it and selling it. According to one source, they are selling the ore for as little as $15 per metric ton. Considering that the price of iron ore per dry metric ton in March, 2014 was around $111 on the licit market, that is a considerable markdown. Even considering Reuters‘ report, where the selling price from the illegal mining operations was about $32/metric ton, it’s still dirt-cheap.

With the Caballeros Templarios controlling the entire supply chain from the mines to the port of Lazaro Cardenas, they are making money from the mining, transport, and sale of the iron. While China’s demand for steel has dropped a little this year, as its economic growth and urbanization has slowed, the PRC has been a rapacious importer of iron and steel for years, driving the prices of steel up. China has also shown a marked tendency to exploit chaotic situations in resource-rich countries in order to extract the minerals or oil on the cheap.

In 2013, an Afghan official was found guilty of accepting a $30 million bribe to award the Anyak copper mine contract in Lorgar Province to the Chinese. The Chinese are developing the mine, and apparently have their eye on more. They have not contributed to Afghanistan’s security, but are pushing the exploitation of the country’s natural resources. Meanwhile, MCC, the state-run Chinese mining company that won (bought) the contract, is attempting to renegotiate the deal to avoid building infrastructure in return for extracting copper.

China’s business deals in Africa are extensive, trading cash and some infrastructure support for natural resources, such as oil and minerals. The Chinese have shown a consistent disregard for the human-rights records of their commercial partners, and the fact that they’ve been willingly buying from the Caballeros Templarios points to a general lack of give-a-damn when it comes to who they are doing business with.

That’s not all, though. See the following extract from an email between members of the FARC secretariat in 2007:

They gave us a list of prices from last month, including transportation. They offer refurbished Chinese AKs that appear as used, but in reality are new, and were not distributed to the Chinese army, which developed a new line of weapons, for $175. AK 101 and 102, completely new, for $350. Dragunovs, new with scopes, $1,200. RPG launchers for $3,000 and grenades for $80. They say they have a thermobaric grenade that destroys everything in closed spaces (like the bombs the gringos use against Alqaeda hideouts) for $800. Chinese missiles (which they say are the most up-to-date at this time) with a 97 percent effective rate, $93,000, and $15,000 for the launchers. They say it is very easy to use, and they guarantee the training. If one of these missiles were identified inside Colombia it would cause them a lot of problems, but if, on the side, they include old Russian SA-7s, it would serve to confuse, mislead or at least give the impression that the guerrillas have weapons of different types, not just Chinese. The ammunition for AKs is 21 cents a round, but if we buy more than 3 million rounds, the price drops to 9 cents a unit.” —Source: Convergence: Illicit Networks and National Security in the Age of Globalization