A wave of violence has erupted in Mexico following the killing of the longtime leader of the Jalisco New Generation Cartel (CJNG) on February 22.
In a coordinated military raid with the support of U.S. Intelligence, Mexican forces killed Nemesio "El Mencho" Oseguera Cervantes. Within hours, cartel gunmen torched vehicles, erected roadblocks across roughly 20 states, and launched attacks on civilian and security infrastructure.
The removal of a cartel boss rarely ends violence in Mexico. It often accelerates it.
El Mencho's death has opened a power vacuum inside one of the country's most militarized criminal organizations. In these transitory periods, factions compete for succession, regional lieutenants assert autonomy, and rivals test territorial boundaries. The result is fragmentation — and a surge in kidnappings, extortion, hijackings, and targeted killings.
CJNG's influence stretched across key mining and agricultural corridors, including Jalisco, Michoacán, Zacatecas, and parts of Durango. These are not peripheral zones. They overlap directly with Mexico's most productive silver belts and high-value export agriculture.
Silver On A Fault Line
Mexico is the world's largest silver producer, and several of its most important mines sit squarely in or near territories historically influenced by the CJNG.
Fresnillo’s (OTCPK: FNLPF) Mina Proaño, the world’s largest primary silver mine, is in Zacatecas. Pan American Silver's (NYSE:PAAS) Juanicipio mine is also nearby. Meanwhile, Durango hosts First Majestic Silver's (NYSE:AG) prolific San Dimas Mine – one of the country's cornerstone underground silver-gold complexes.
In 2024, these 3 mines produced over 75 million ounces of silver – nearly 10% of the aggregate global mine supply.
Thus, any escalation in cartel fragmentation, transport blockades, labor intimidation, or extortion attempts in these regions carries global supply consequences.
Ross Beaty, founder of Pan American Silver and chairman of Equinox Gold, has openly acknowledged the concentration risk in an interview with Kitco. After instability forced shutdowns at Los Filos, he warned that if a company held only that single Mexican asset, "our valuation would have gone to zero."
The Other Commodity Front
The economic danger extends beyond silver. Michoacán — El Mencho's home state — is crucial in the global avocado trade.
Cartels compete for control of orchards, packing houses, and transport corridors, imposing fees on growers and exporters. Road blockades disrupt shipments to the U.S. border and Pacific ports.
When cartel conflict erupts, insurance costs spike and logistic chains fragment for nearly one-third of the global avocado supply.
The "Cartel Alpha" Problem
A more insidious risk is the "cartel alpha." In theory, criminal actors with access to leverage could exploit financial markets alongside territorial violence.
These parties could build short exposure through derivatives, and then trigger operational chaos via kidnapping, sabotage, or blockades to drive equity prices lower. Highly leveraged junior miners are particularly vulnerable: thin liquidity magnifies price impact when bad news hits.
There is no public evidence that this is a widespread or organized practice today, but the structure exists. A single event can erase years of shareholder value in a matter of days. And in fragile transition periods, like the one following El Mencho's death, it becomes easier to mask such actions within the broad chaos.
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