By Joseph Kirschke

After a brief shootout in October, Mexican authorities proudly announced the death of Heriberto Lozcano, or Z-3, a notorious leader of Mexico’s Zetas, its most feared and brutal drug cartel.

Like so much in northern Mexico near the Texas border, the immediate disappearance of Lozcano’s body wasn’t a total surprise. More intriguing, though, was where “The Executioner” was discovered: unguarded, watching baseball at a restaurant in Progreso in Coahuila state—home to 95% of Mexico’s $3.8 billion coal industry—where he had been working as a miner.

The Zetas’ foray into Mexican coal mining isn’t new, but it has garnered publicity in recent months following a surge in cartel activity, including its most recent prison break—one of the biggest in history. But ultimately it’s been ex-Gov. Humberto Moreira who, since his son’s recent slaying by cartel members, has given it the most attention.

Moreira, himself tainted by corruption after a seven-year term, said Lozcano would “go to the store to buy soda and chips, he did not walk around armed or anything—he was a miner.” True to form, while under U.S. indictment, Lozcano allegedly even hunted zebras specially imported from Africa at a local game park.

“It’s an open secret that drug traffickers are infiltrating the coal mines,” a local businessman confirmed anonymously to Agence France-Presse. “But since Moreira spoke out, we have seen police and military around.”

Mexico’s Reforma newspaper reports that Zetas and other criminals sell 10,000 tons of coal a week—in a region producing 15 million tons annually—for a profit between $22 million and $25 million per year. Customers have included PRODEMI, a state government body which has, in turn, sold it to the Federal Electricity Commission (CFE); an investigation is underway.

Such endeavors aren’t unique to the enterprising Zetas, a former elite military unit first co-opted in 1997 by the mainstream Gulf Cartel it has since turned against. “We’ve seen Zetas making millions off crude oil and finished products, gas and diesel,” said Scott Stewart, a Latin America specialist at Stratfor, a risk analysis firm.

In Mexico’s drug war which has claimed 30,000 lives since 2006, most cartels focus on narcotics.  Zetas, on the other hand, are “equal opportunity criminals for everything—people smuggling, CD and DVD piracy,” noted Stewart. “They do it all.”

This is accomplished through consolidation of massive territories where Zetas “exploit everyone in the region,” said Howard Campbell, a professor of Anthropology at the University of Texas at El Paso.

In their wake, tortured and mutilated bodies turn up with depressing regularity. “They’re sort of like Vikings,” noted Cambell. “They rape, pillage and plunder.”

But given Mexico’s mineral-rich “Aztec Tiger” economy—as Latin America’s fourth mining producer and the ninth-biggest worldwide—others are getting in on the act, too.  

In 2010, when mining first overtook tourism in revenue, according to Mexican Mining Chamber data, Mexico exported $15.5 billion in mineral exports with increases forecast through 2015. Mexico is also a bismuth, lead and zinc leader with one of the highest silver concentrations anywhere and, notes the National Institute of Statistics and Geography (INEGI), possesses mineral deposits in 26 of 32 states. Its Silver Belt (“Faja de Plata”), notably, is the world’s most productive silver region—yielding 10 billion oz. of silver with 75 million gold oz.

Other cartels and local bandits are thus on the prowl elsewhere in Mexico, albeit less systematically: In 2008, for instance, the government reported $8 million in gold missing while, in 2010, some $240 million in steel vanished. That year, Canada’s Goldcorp and Torex Gold Resources temporarily suspended ground transportation after run-ins with local outlaws, before enhancing security. (“We didn’t need our people staring down the wrong end of a gun,” said Torex CEO Fred Stanford, adding his company wasn’t affected by cartel activity.)  

But it’s the Zetas who rule most audaciously and with little heed to working conditions in Coahuila’s poorly-run mines with their history of frequent accidents and fatalities, including a 2006 methane explosion that killed 65 miners. Local activist and Catholic Bishop Raul Vera Lope has been especially vocal in condemning Mexican authorities for allowing the “modern slavery” Coahuila’s coal miners experience by the Zetas.   

Ransom kidnappings of mine workers are typical, as are $40,000 monthly security fees levied against individual mines, according to InsightCrime, a firm that tracks organized crime in Latin America. The Attorney General’s office, meanwhile, is now probing extortion cases involving 300 mines nationwide, the newspaper Excelsior has reported.

Given their trademark savagery, the Zetas are also deemed the biggest threat to the Mexican state, according to the U.S. Drug Enforcement Agency (DEA), plying trafficking routes to Guatemala, Nicaragua and beyond. Operating in a loose federation of cells, almost like insurgents, they exhibit technical prowess—easily outgunning their competitors—with high-caliber assault rifles, grenade launchers and even helicopters.

Unsurprisingly, say observers, the Zetas have taken to planting the same blasting gel used by local coal miners, Teovex, in their car bombs. Most often they serve as warnings, though, said Sylvia Longmire, a consultant for U.S. law enforcement agencies and author of “Cartel: The Coming Invasion of Mexico’s Drug Wars.”

“They’ll usually go off in front of a police station,” she added, but usually only to protect business interests, in lieu of mass casualties. “Cartels don’t get caught.”

Such violence has been escalating across the region around Highway 57, and in Piedras Negras or “Black Stones,” a city of 150,000. Across Coahuila, the tiny roadside mines, or “pozos,” that dot the landscape are big targets.

Nonetheless, Mexico’s mining sector, representing 6% of global financing in exploration, warmly embraces foreign direct investment (FDI). The government allows for 100% private ownership for the exploration and production of metals and minerals. Low labor costs with 60% of its mines open pit are further FDI incentives. Other benefits include assistance from the Mexican Geological Service which helps foreign companies discover and develop mines.

The 2010-2011 Survey of Mining companies by Canada’s Frasier Institute ranks Mexico highly for workforce stability, as well as environmental, regulatory and taxation issues. The Metals Economics Group (MEG) consultancy, in fact, lists Mexico as the nation with the fourth-biggest exploration budget worldwide and No. 1 in Latin America.

In 2009, according to government statistics, mining extraction and processing were significant in reviving domestic growth—with 280,000 direct and 1.5 million indirect jobs—after the global recession. Nationwide, there are some 700 mining projects operated by more than 290 companies.  

Nonetheless, the above-board nature of much of Mexico’s mining industry is sometimes deemed a barrier to less scrupulous interests. For one thing, it takes six to 12 months for an environmental impact authorization alone—a length of time dishonest investors don’t always want to wait.  

Indeed, drug gang appropriation itself sometimes leaves Mexico’s mining boom vulnerable to foreign markets—not least emerging ones.  Jesus del Campo, an Economic Ministry official, has also publicly said some outside businesses actively encourage illegal mining to bypass permitting altogether.  

In 2010, for example, Ignacio Lopez, a money launderer for the Familia Michoacana in southwestern Michoaca, was arrested for exporting $42 million in iron ore to China. That year, steelmaker ArcelorMittal filed a complaint with authorities that iron had been stolen from an operation there.

All this belies one other reality: Selling or laundering money with something legal like coal, silver, gold or bismuth, rather, is far easier than retailing marijuana, cocaine or heroin—three other substances U.S. and Mexican authorities have spent billions trying to combat.

Such a strategy is not endemic to Mexico. Factions in Colombia mired in a counterinsurgency campaign featuring cocaine-exporting Marxist rebels are themselves enjoying financial help from some 6,000 wildcat miners at 30,000 illegal mines.

Regardless of his experience back home, Oscar Naranjo, the retired Colombian four-star general recently appointed to advise the Mexicans on the drug war, has his hands full already.