The Daily Caller

The Daily Caller
              In this Aug. 14, 2013 photo, Mexican army soldiers enter the iron ore mine in the town of Aquila, Mexico. A resident of Aquila, said that since 2012, the Knights Templar cartel demanded residents hand over part of the royalty payments from the local iron ore mine operated by Ternium, a Luxembourg-based consortium. Mexican drug cartels long ago moved into oil theft, pirated goods, extortion and kidnapping, but it still came as a shock this month when federal officials revealed the gangs have broadened the scope and sophistication of their economic empires by entering the country’s lucrative mining industry, exporting iron ore to Chinese and other foreign mills. (AP Photo/Agencia Esquema)
              In this Aug. 14, 2013 photo, Mexican army soldiers enter the iron ore mine in the town of Aquila, Mexico. A resident of Aquila, said that since 2012, the Knights Templar cartel demanded residents hand over part of the royalty payments from the local iron ore mine operated by Ternium, a Luxembourg-based consortium. Mexican drug cartels long ago moved into oil theft, pirated goods, extortion and kidnapping, but it still came as a shock this month when federal officials revealed the gangs have broadened the scope and sophistication of their economic empires by entering the country’s lucrative mining industry, exporting iron ore to Chinese and other foreign mills. (AP Photo/Agencia Esquema)   

Increasingly wealthy cartels expand into the ore business

Photo of Jason M. Farrell
Jason M. Farrell
Writer and Activist

Who else has been wondering how the war on drugs has been going? Are we still winning? I could have sworn we were mere weeks away from finally eradicating the last of those damned cartels, confiscating their labs and ushering a new epoch of peace and sunshine for all.

Time for a Google search. From ABC news, this: “Mexican Drug Cartels Now Make Money Exporting Ore.

Well … that’s great.

“Even back in 2010, the La Familia cartel would take ore from areas that were under concession to private mining companies, sometimes with the aid or complicity of local farmers and land owners, then sell the ore to processors, distributors and even, apparently, foreign firms,” ABC reported. Mexico estimates the cartels shipped out over 1 million tons of ore in 2010.

Yahoo News said the cartels are “ready to defend their mines at gunpoint.”

The drug business is going so well they are expanding into other businesses. I’m looking forward to the day that we see cartel internet start-ups, web apps and fast food chain restaurants. Perhaps we’ll finally see a Sinaloa IPO next year.

But why haven’t the governments beaten the cartels? Surely all the drug seizures I saw on Border Wars have put a dent in their business? “The average drug trafficking organization … could afford to lose 90% of its profit and still be profitable,” says Robert Stutman, a former DEA Agent. In the U.S., serious and casual drug users combined spend about $60 billion per year obtaining their fix.

The United Nations estimates that current drug interdiction efforts intercept approximately 13 percent of heroin shipments and 28 to 40 percent of cocaine shipments. The U.S. military says it intercepts about 33 percent of the drug shipments it has been able to track. No word on what it isn’t tracking.

Despite the billions of dollars spent to stop them, cartels are seeing windfall porfits. The U.S. drug marketplace has grown so competitive and efficient that cocaine is 74 percent cheaper than it was thirty years ago, according to the New York Times. All the while the expense for waging the drug war has increased exponentially in the U.S. while addiction and usage rates remain constant.

We know that prohibition of a good for which there is market demand can produce a black-market economy. But it seems under the right circumstances it can even create a parallel government.

The Zetas, one of the most powerful and brutal Mexican cartels, have figured this out. They have become so powerfull that one Mexican lawmaker has classified them as a “parallel government” in a 2009 interview with The Washington Post. “They practically own vast stretches of the pipelines, from the highway to the very door of the oil companies,” he said. In addition to their substantial drug and ore profits, the Zetas were allegedly responsible for the theft of around $1 billion worth of crude oil in 2009, much of which was smuggled to China and the United States.