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.