Pressure mounts on Grupo Mexico owners

"Judge: Sterlite can buy Valley-based Asarco
...Associated Press

...U.S. Bankruptcy Judge Richard Schmidt approved the request Wednesday from Asarco's court-approved board to sign a sale contract with Sterlite Industries Ltd.

That will spur competition with Grupo Mexico SAB of Mexico City, which owned Asarco but lost control after Asarco filed for Chapter 11 reorganization in 2005.

Grupo Mexico has said it would pay $1.3 billion to reassume control - a move Asarco officials oppose. Sterlite offered $2.6 billion last year but withdrew the bid when copper prices plunged. Asarco is able to accept a higher offer until its reorganization plan receives final approval.""


http://www.azcentral.com/news/articles/2009/04/24/20090424asarco0424.html

2007 CMA CGM launches first Chinese port venture; is also interested in Mexico Punta Colonet seaport

" Monday, November 26, 2007  CMA CGM in first Chinese port venture
[http://cargobusinessnews.com/archive/week_of_112607.html]

A “STATEGIC cooperation agreement for the development of the port of Haicang at Xiamen” was signed Nov 26 by CMA CGM Group, the municipality of Xiamen (Fujian province), and New World Services Holding Ltd. (NWS), according to a company announcement.

 This will be CMA CGM’s first port investment project in China. The French group has shares in 16 port terminals around the world.

 According to the agreement, CMA CGM and its partners will invest in the construction and management of a deep water container terminal.

 The container port is planned to be operational in 2009.

 CMA CGM is the third largest container shipping group for international traffic in China, with 280,000 TEUs planned for 2007, according to the announcement.

 New World is a “well-established Hong Kong–based group with a rich experience of investments in transport infrastructure projects in China, especially in ports (Xiamen, Tianjin, Dalian, and Wenzhou).”

 The ceremony, at the Great Hall of the People in Beijing, was attended by French President Nicolas Sarkozy and Chinese President Hu Jintao."

Company interested in Punta Colonet is profiled by Greenpeace, scrapping their ships in Asia

"Greenpeace has selected 50 ships which might be scrapped soon. We have asked the owners of these ships to declare that their ships will be decontaminated before scrapping at Asian countries. Until that time Greenpeace will follow and monitor these (and other) ships.

Fort Royal (renamed CMA CGM Arno)

Name:      Fort Royal (renamed CMA CGM Arno)
Type, year of  build, size,  flag:      Container ship, 1979, 30,998 DWT, Panama flag (since 14-07-2003)
Shipping  company:      CMA-CGM in France Jackson Navigation in Taiwan
Comments:      CMA/CGM is number one in France in containerised liner shipping industry and eigth worldwide. The company operates 90 ships, a quarter of which are company owned.

Fort Royal capacity: number of 20 foot equivalent unit containers is 1512. The vessel was built at Dunkirk, France.

Scrap record:

    * The container Chicago Express was sold to Indian breakers for US$2.64M in 2001."
http://www.greenpeaceweb.org/shipbreak/50-ships.asp?id=31

ICA expects Punta Colonet tender to be launched in 2010 - Mexico -- Contracts to be awarded August 31 2009

"ICA expects Punta Colonet tender to be launched in 2010 - Mexico Monday, March 9, 2009

Mexico's largest construction firm, ICA (BMV, NYSE: ICA), does not expect the 50bn-peso (US$3.26bn) Punta Colonet port project, in Baja California state, to be tendered before 2010, the firm's VP of administration and finance, Alonso Quintana, told BNamericas.

"Punta Colonet has been delayed considerably, as it is a very, very large project involving building railroads to adequately handle containers and have them sent to the US," Quintana said. "We do not expect to see any bidding rules or documents published before next year."....

On January 27 this year, the transport and communications ministry (SCT) invited firms interested in the project to register by May 15.

The announcement followed a statement made on January 14 that the tender would be postponed indefinitely due to the global economic crisis, the second time the project had been delayed.

According to SCT's new schedule, the concession will be awarded on August 31 this year.....

Several companies from the US, Europe and Asia have expressed interest in the project.Companies include multinational port operator Hutchison Port Holdings and French container shipping company CMA-CGM. Construction will take 4-5 years.

Renzo Dasso
Business News Americas"
http://www.bnamericas.com/content_print.jsp?id=470543&idioma=I&sector=&type=NEWS

January 2009,,Punta Colonet Port Project Put on Hold

"Puerto Vallarta News NetworkBusiness News | January 2009
http://banderasnews.com/0901/nz-puntacolonet.htm

Punta Colonet Port Project Put on Hold
Frontera NorteSur
Punta Colonet could to be transformed over the next decade into a megaport that will help to handle the increasing amount of cargo coming from eastern Asia. (Charlie Neuman/Union-Tribune
Like Punta Colonet, the Manzanillo expansion to the south has also drawn fire from environmentalists.

A massive port planned for Mexico's Baja California peninsula could be among the latest casualties of the world financial crisis. Luis Tellez, Mexico's head of the Secretariat of Communications and Transportation (SCT), announced last week that authorities decided to postpone contract bidding for the construction of the Punta Colonet terminal slated for a remote section of the Baja California peninsula about 150 miles south of San Diego, California. Tellez said the global economic outlook didn't favor Punta Colonet at the moment.

"There is clearly competition for extensive resources," Tellez said, "and given the magnitude of Colonet we are seeing if there is the capacity to finance it."

The postponement was the second time in recent months that the SCT has put off issuing contracts to build and maintain a commercial trade and shipping complex that is envisioned to be larger than the ports of Los Angeles and Long Beach combined. Originally slated for completion on the Pacific side of Baja California in 2020, Punta Colonet was planned as the northern Mexican shipping hub of the China trade capable of handling 6 million containers every year.

Tellez did give an exact date for the opening of bids, but he insisted the project would move forward at a later date. Mexican officials, Tellez added, were working with Citibank and a second US bank to study financing options for a construction project that could cost more than $1.5 billion.

But earlier developments like the announced expansion of the Panama Canal is leading to speculation that Punta Colonet is dead even before it hits the water. Fernando Ramos Casas, president of the Latin American Confederation of Customs Brokers judged Punta Colonet as an unviable proposition under present circumstances. "(Punta Colonet) would have been better three or four years ago, Ramos said.

An unscientific, online poll conducted by the Tijuana news daily Frontera reported January 19 that 60.5 percent of 967 respondents believed a port at Punta Colonet would happen, while 39.5 percent did not think it would see the light of day.

It's not yet clear how the Punta Colonet postponement will affect the Santa Teresa train and transportation terminal planned for the New Mexico-Chihuahua border. Last year, the SCT declared that Santa Teresa would constitute an important hub for cargo headed to consumers in the US heartland from Punta Colonet.

Not everyone is disappointed that Punta Colonet is off the map – at least for now. Green activists have long criticized a mega-project they contend would attract thousands of new residents and generate an intense demand for services in a place Mexican environmentalist and columnist Ivan Restrepo once called a "national treasure" and a "flower of the earth." Restrepo and other environmentalists fear a mammoth port at Punta Colonet would seriously disrupt migratory bird habitats, disturb grey whale migrations and damage vegetation and landscapes unique to the fragile Baja California ecosystem.

"This is very good news for those who care about conservation in Baja California," said a message posted on the website of the binational green group Wild Coast in response to Tellez's announcement.

Despite a predicted 20-30 percent drop in the volume of cargo traffic through Mexican ports this year, the SCT is moving ahead with contract bidding for improvements and expansions in other ports that could reach close to US$2 billion. Nationwide, investment in Mexico's port infrastructure increased 15.8 percent during the first two years of the administration of Mexican President Felipe Calderon.

Meanwhile, with the fate of Punta Colonet up in the air, SCT Secretary Tellez's role in pushing the ongoing expansion of the large port of Manzanillo on the Pacific Coast is receiving renewed press scrutiny. The Mexican cabinet minister served as an advisor to the private SSA Mexico cargo company, one of the firms interested in expanding Manzanillo, from 2002-2006, just prior to joining the Calderon administration.

Tellez, who resigned from SSA Mexico before beginning federal service, has defended himself from conflict-of-interest charges. "The participation of SSA in the bidding does not depend on the SCT," Tellez was previously quoted as saying. "The authorization depends on the Federal Competition Commission."

Like Punta Colonet, the Manzanillo expansion to the south has drawn fire from environmentalists. Construction activities in Manzanillo have caused major damages to a 260-acre mangrove swamp, prompting some environmentalists to charge that Mexico is in violation of the 1971 International Convention on Wetlands and the Inter-American Convention on the Protection and Conservation of Sea Turtles, an agreement Mexico formally accepted in 2000.

Environmentalists are likewise concerned that two bills currently in the Mexican Senate and Chamber of Deputies would make the destruction witnessed at the Manzanillo mangrove swamp, which Secretary Tellez pledges to repair, the norm rather than the exception.

Sponsored by representatives of the Institutional Revolutionary Party, the legislative initiatives propose weakening environmental impact study requirements meant to protect mangroves if social and economic benefits from a particular development could be demonstrated.

Besides serving as bird habitat and breeding grounds for aquatic life, mangroves are important barriers against hurricanes, which many climate change researchers warn could grow worsen in coming years.

Additional sources: Frontera, January 19, 2009. Proceso, January 18, 2009. Article by Jenaro Vilamil. Milenio, January 16, 2009. Articles by Marisela Lopez and Luis Carriles. Agencia Reforma, January 14, 2009. Articles by Lilian Cruz. La Jornada, March 4 and 31, 2008; January 19, 2009. Articles by the Economist Intelligence Unit, Ivan Restrepo and editorial staff. Wildcoast.net

Frontera NorteSur (FNS)
Center for Latin American and Border Studies
New Mexico State University
Las Cruces, New Mexico

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes • m3 © 2009 BanderasNews ® all rights reserved • carpe aestus"

==========================
"Five billion dollars is about to transform a sleepy seaside town on Mexico’s Baja California into one of the world’s busiest shipping centers, providing once-in-a-lifetime business opportunities for U.S. and international investors.

In just 3-5 years, Megapuerto De Punta Colonet, or the megaport of Punta Colonet, will handle six million containers (TEUs) a year – twice the total number handled in all of Mexico in 2007. Volume is expected to triple within 15 years. Most of the freight will arrive from Asia, destined for the United States......

Punta Colonet, 150 miles south of San Diego, will be the terminus of a vital new rail connection to U.S. freight transfer cities, possibly including Yuma, Arizona or El Paso, Texas. The new route will allow trains to avoid congested tracks in Southern California.

The bold project, championed by Mexico president Felipe Calderon, is urgently needed to relieve chronic freight bottlenecks at the United States’ largest ports, Long Beach and Los Angeles. ....

Facility construction costs will be borne by the private companies ......

Port construction bids are expected from, among others, Empresas ICA SAB, the country's largest construction company, billionaire Carlos Slim's Impulsora del Desarrollo y el Empleo en America Latina SAB, and the building unit of Grupo Mexico SAB. The winning bidder for a 45-year concession to operate the port and rail line is to be announced in December 2009."
http://www.affordablewebhosting.com/puntacolonet.htm

==========================

Pressure continues to build to privatize PEMEX and natural gas resources and/or operations in Mexico

Google Alert - PEMEX

Around the world: Output down again for Pemex | Business | Chron ... Mexico’s oil production has been falling as reserves are drying up, and Pemex has been slow to explore promising deep-water deposits. ...

---

Glencore may enter bidding war for Asarco

Well well well....

Arizona Geology: Glencore may enter bidding war for Asarco By Lee Allison A one-sentence story from the Wall Street Journal says Glencore International is very interested in buying bankrupt Tucson-based Asarco. Glencore is one of the largest privately owned companies in Europe with worldwide commodity ... Arizona Geology - http://arizonageology.blogspot.com/

===========
"Shares of steel producer Grupo Simec topped percentage gainers with a rise of 3.9% and shares of Grupo Mexico rose 3.6%. Dow Jones Newswires reported late Monday that Swiss miner Glencore International is interested in buying Grupo Mexico's Asarco unit, which is working its way through bankruptcy court in Texas.

The peso was up 0.2%, gaining ground against the U.S. dollar in the wake of the central bank's auction of up to $4 billion in dollar credits by way of a $30 billion swap line the bank has with the U.S. Federal Reserve."

http://money.cnn.com/news/newsfeeds/articles/djf500/200904211601DOWJONESDJONLINE000588_FORTUNE5.htm
===========

"Año X - Madrid, martes 21 de abril de 2009

Glencore planta cara a Grupo México por el control de Asarco

Glencore se ha convertido en el último obstáculo para que Grupo México recupere el control de su filial estadounidense Asarco. La firma suiza ha reconocido que sigue muy interesada en la compañía, una asemana después de que la minera azteca presentase una oferta para impedir que su filial llegase a un acuerdo con la india Sterlite. Aunque este "culebrón empresarial" se decidira finalmente en los juzgados, todo parece indicar que será la cifra más elevada la que decida el futuro de la compañía. Grupo Mexico aseguraba la pasada semana que ofrecería 1.300 millones en efectivo por recuperar a su filial, una cifra superior a los 1.100 millones de dólares ofrecidos por la india Sterlite. Aunque los representantes legales de Glencore no han querido hablar de la cifra que están dispuestos a ofrecer, el regreso de la compañía a la puja podría hacer que sus competidores vuelvan a subir sus primeras ofertas. Según fuentes consultadas por la agencia Dow Jones, Sterlite estudia ya aumentar su oferta. En principio, la empresa contaría con el apoyo de los sindicatos de Asarco, autoridades y el consejo de administración. Pero, y aunque la oferta de Grupo México es menor, los acreedores también tendrán muy en cuenta el factor “psicológico” de terminar rápidamente con este juicio que dura ya más de tres años y medio. Algunos analistas, como los de BBVA Bancomer, ya han emitido diversos informes en los que aconsejan a la compañía aceptar la oferta de Grupo México, que sin duda necesita, ahora más que nunca, recuperar el control de su filial. Después de la caída que los precios del cobre experimentaron a finales del pasado año, en 2009 han conseguido rebotar un 51%, gracias a las esperanzas de un aumento en la demanda china. Con este panorama, Grupo México no puede permitirse perder los activos de Asarco."

http://www.americaeconomica.com/portada/noticias/210409/clglencoregrupomexico.html

Police: Death of Freddie Mac CFO may be suicide

" * Story Highlights
* NEW: Police were called by someone inside home, police spokesman says
* NEW: Neighbors describe Kellermann and wife as friendly, happy,
"terrific people"
* Freddie Mac CFO died by hanging, according to source familiar with
the case
* No signs of foul play at home where David Kellermann found dead,
police say

VIENNA, Virginia (CNN) -- The acting chief financial officer of mortgage
finance giant Freddie Mac was found dead Wednesday morning at his home,
police said."
http://edition.cnn.com/2009/US/04/22/kellermann.death.freddiemac/?imw=Y&iref=mpstoryemail

Google Alert -

$50.4 Billion In Infrastructure Projects Announced Water Online (press release) - Horsham,PA,USA The 500+ executives participating in the Forum include executives from leading oil & gas firms, including Pemex and Petrobras, along with global ... See all stories on this topic

DOE's Oak Ridge Mixed Toxic-waste Incinerator began burning waste the same year ASARCO worked to install the ConTop furnaces (for secret toxic burning) in El Paso Texas

"OAK RIDGE, Tenn. (WVLT) -- The Department of Energy is pulling the plug on Oak Ridge's controversial toxic waste incinerator. The DOE says it'll stop receiving waste by the end of April.

Crews are scheduled to begin demolishing the facility in five years.The incinerator has burned concerns about emissions for years.

"It's basically done it's job," DOE spokesman Walter Perry said.

That job's been burning more than 33 million pounds of waste since 1991."

"The incinerator fueled controversy and environmental concerns. Dozens of Oak Ridge workers became sick in the late-nineties."

[see http://www.downwinders.org/michel.htm]

http://www.volunteertv.com/home/headlines/43321617.html

[Strange Coincidences:  the ASARCO El PASO smelter bankruptcy is winding up this April - and they have refused to talk about the formerly-secret-toxic-waste.  The smelter burned secret stuff from military origins, too.  Asarco El Paso workers started getting ill in the late 1990's from things they'd never seen before.  Five years after it was closed in 2/99, the company began making noises about re-opening the smelter (2004).   The Beta Radiation levels in El Paso the winter of 1998 were the highest in the nation.  The EPA Region 6 claimed that this was harmless background radiation]

Freeport makes NM settlement Chino Mine spill

Freeport pays state $276000 settlement New Mexico Business Weekly Bizjournals.com - Charlotte,NC,USA The New Mexico Environment Department has reached a $276000 settlement with Freeport-McMoRan Chino Mines Co. The settlement is for a spill of acidic mine ... See all stories on this topic

Settlement reached in Silver City acid spill KDBC - el paso,TX,USA AP - April 17, 2009 3:05 PM ET SILVER CITY, NM (AP) - The state Environment Department has reached a $276000 settlement with Freeport-McMoRan Chino Mines ... See all stories on this topic

Commodities Market : Vedanta group suffered a major jolt on Tuesday

Google Blogs Alert for: asarco

Commodity Online Official Blog: Asarco deal: Sterlite gets a Grupo ... By Binu Alex India’s Vedanta group suffered a major jolt on Tuesday when the mining giant Grupo Mexico outbid Vedanta’s Sterlite Industries in the acquisition effort for bankrupt copper mining firm Asarco.....

[Fwd: Google Alert - Freeport McMoran]

Copper Prices Climb as Falling Inventories Signal Rising Demand Bloomberg - USA Cuggino recommends investors buy shares of Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper producer, as a way to take ... See all stories on this topic

Freeport sues workers for refusing to accept layoffs Jakarta Post - Jakarta,Indonesia PT Freeport Indonesia, a local unit of US giant gold and copper producer Freeport-McMoRan Copper & Gold Inc, has filed lawsuits against five workers who ... See all stories on this topic

Direction of World Economy is favoring Freeport McMoran and other Copper Producers

Google News Alert for: Freeport McMoran

Is Deflation Still a Problem? Zacks.com - Chicago,IL,USA Not only is that good news for copper firms like Freeport McMoran (FCX) and Southern Copper (PCU), but it is good news for the world economy. ... See all stories on this topic

Carlyle Group

How come ASARCO will only pay pennies on its debt and come out looking
squeaky-clean --- while parent company's Ferromex (partnered with UP railroad) and CSX railroad want
to take over a huge amount of the continental-shipping, and route
non-union-managed freight right through the Asarco contamination at Santa Teresa NM?? And why didn't anyone tell us about this? Carlyle Group owns 20% of Grupo Mexico, all of CSX, and the lead-person at USA Carlyle Realty group used to be in charge of a Sanders company. That is an impressive string of coincidences.

Why didn't anyone tell us about this, or that the local highway authority had planned to put an elevated toll-road right through the worst of the ASARCO contamination--- by building it right on top of Paisano right next to the smelter stack (and on top of our water-supply?). The MPO has approved those funds. Said that they'd hold ASARCO's "feet to the fire".

[pub. under Fair use]

DOJ's new OPR Ms. Brown

"Previous to her work at the Department, Brown was a litigation associate at the Washington, D.C. office of Dickstein, Shapiro & Morin (now Dickstein Shapiro) from 1984 to 1989."  see:
http://news.yahoo.com/s/usnw/20090408/pl_usnw/attorney_general_eric_holder_names_new_leadership_for_atf__executive_office_for_u_s__attorneys__and_office_of_professional_resp

Her old law firm  is connected to John B. Breaux through the CSX railroad (he is a director since 2005), and (now retired) Senator Breaux shows a relationship to Asarco-- through the lobby firm of Patton Boggs LLP  (Breaux was a special advisor)

[Carlyle Group. Recall that in 2002, it purchased the International CSX Lines Division for $300 million, see http://www.utulocal1548.org/UP_s_Intentions.doc]

 

S&P warns liquidity problems ahead for Grupo Mexico

Mineweb - BASE METALS - S&P warns of liquidity problems for Grupo ... A multi-billion court decision finding Grupo Mexico and its subsidiaries culpable in the fraudulent transfer of millions of shares which helped send Asarco into bankruptcy could hurt the companies' financial future. ... Mineweb - Daily news headlines - http://www.mineweb.com/

---

The GNEB 12'th report skips the ASARCO disaster

  www.epa.gov/ocempage/gneb/gneb12threport/English-GNEB-12th-Report.pdf

- not very neighborly of the committee (many whom are from this region) to entirely skip mention of the Asarco smelter whose groundwater plume has now reached the Rio Grande and our international Hueco Bolson.

Is this the type of scientific reporting our new Administration deserves?  I don't think so.   The new administration deserves better than this.

GNEB 11th report has no mention of the ASARCO El Paso disaster

Neither the secret haz-waste remaining here or the collapse of ASARCO's
rubber lake into our drinking water during 9/06 was mentioned.

Is this report "being a good neighbor" to the Paso del Norte citizens?

Grupo Mexico's Ferromex (bidding on 45 yr freight contract through Santa Teresa), CSX, BNSF, and CARLYLE group

http://www.utulocal1548.org/UP_s_Intentions.doc
"To stay informed go to WWW.UTU.ORG

JUST WHAT ARE UP'S INTENTIONS?

(The following opinion article explores the political connections of Union Pacific Railroad and speculates on intentions of Union Pacific to acquire rail routes in Mexico as a prelude to merging with either CSX or Norfolk Southern as well as Canadian Pacific. The article was published Jan. 8 in a transportation law journal.)

Is Union Pacific (UP) in the hunt for Mexico’s largest and most prized railroad -- Kansas City Southern de Mexico (KCSM) --– now leased by Kansas City Southern Railway (KCS)?

What UP possesses to make this a reality -- and which BNSF Railway, also in the hunt, may not possess -- are the political connections in Mexico.

For sure, BNSF has the cash to make an unsolicited bid for stock control of KCS; but BNSF may not have enough political muscle to obtain Mexican government approval for control of KCSM.

It is said that with the right political connections in Mexico, one might achieve most anything. And while UP may be short of cash, it is rich with political connections.

Indeed, all it might take for UP to snatch control of KCSM is an unsolicited bid for KCS by a cash-rich private equity firm friendly to UP -- such as the Carlyle Group; followed by a break-up of KCS, with KCSM being transferred to UP with the help of politicos in Mexico.

So important are those political connections south of the border that even were BNSF to make an unsolicited bid for KCS, the KCSM routes could still be transferred to UP.

You see, it’s highly unlikely the U.S. Justice Department, Federal Trade Commission or even Surface Transportation Board could assert any jurisdiction over UP’s acquisition of a purely Mexican based railroad -- assuming those agencies, given UP’s superior political connections north of the border, would even blink an eye.

KCSM –-- whose 50-year concession KCS acquired from Mexican conglomerate Grupo TMM – is Mexico’s most coveted railroad, running from Mexico City to Laredo and serving vital Mexican ports, including the booming West Coast port of Lazaro Cardenas. 

UP’s acquisition of KCSM is the sort of transaction over which 19th century rail barons Jay Gould and Cornelius Vanderbilt would have salivated.

With U.S. West Coast ports nearing capacity, and Lazaro Cardenas, on Mexico’s west coast, poised to become a major North American  inbound container port, control by UP of KCSM would give UP domination over Asia-Pacific land-bridge traffic destined to teeming Mexico City, Atlanta, Chicago, Dallas, Houston and Kansas City; and set the stage for a merger between UP and either CSX or Norfolk Southern, creating the first Atlantic-to-Pacific transcontinental railroad.

Likely to follow would be a BNSF merger with the remaining East Coast railroad, creating a transcontinental rail duopoly in the United States.

A WHO’S WHO OF POLITICAL CONNECTIONS

And before you predict a transcontinental rail marriage would not gain regulatory approval, recognize that the U.S. Surface Transportation Board is the sole arbiter of domestic rail mergers, and the STB and its predecessor Interstate Commerce Commission have been facilitators of numerous other major rail mergers, including the 1996 UP-Southern Pacific merger that was strongly opposed by the Justice Department and other federal agencies.

For UP, the grab of KCSM would be equivalent to a month of Sundays.

Is this merely pie in the sky? Well, let’s look at the players -- all UP friends, who comprise a tangled web of well-connected rain makers and politicos.

Begin with UP and its Washington, D.C. law firm, Covington & Burling.

Add to the mix the Carlyle Group, a privately held $19 billion international investment firm with close ties to Bush presidents 41 (a former Carlyle adviser) and 43, as reported by Britain’s Guardian newspaper and U.S. investigative reporter Jerome Corsi.

Stir in other political allies of the Bush family, as well as Mexican politicos, and the tangled web takes on the look of carefully connected dots.

Recall that Covington & Burling, in September 2003, hired Linda Morgan, former chairman of the Surface Transportation Board, who supported UP’s 1996 merger with Southern Pacific, and who indicated to the Washington Post in 1997 that she favored a railroad duopoly in the U.S.

Morgan went to Covington & Burling after Covington partner Mike Hemmer, who headed Covington’s transportation practices group, departed in 2002 to become UP’s chief legal officer.

Morgan also sits on Canadian Pacific’s board of directors, suggesting rather than a U.S. transcontinental rail dupoly, a North American transcontinental rail duopoly is on the horizon.

Focus now on the Carlyle Group. Recall that in 2002, it purchased the International CSX Lines Division for $300 million, then unsuccessfully sought -- in a plan backed by the Bush administration -- to sell its port-terminal operations to a Middle East government-owned entity for some $1.2 billion.

Among the Carlyle Group’s U.S. principals are Richard Darman, the first president Bush’s budget director, and Jim Baker, the first president Bush’s secretary of state and a partner in the Baker Botts law firm that has a long-history of acquisition projects in Mexico.

In November 2006, UP created a new board seat for Thomas "Mack" McLarty, president of Kissenger McLarty & Associates (we’ll get to them) and a senior adviser to the Carlyle Group. Previously, McLarty was President Clinton’s chief of staff and later Clinton’s special envoy to Latin America

And just four months before McLarty  went to the UP board, Andy Card, with ties to Carlyle Group principals, was elected to the UP board. Card was the first president Bush’s transportation secretary -- a job he acquired with assistance from former UP chairman Drew Lewis, also a former transportation secretary -- and was the second President Bush’s first chief-of-staff.

Also, let’s not forget that Vice President Dick Cheney is a former UP board member.

Moreover, the Carlyle Group is no stranger to KCSM. In 2003, the Carlyle Group itself unsuccessfully sought to acquire a 51 percent interest in KCSM (then known as TFM). KCS won the bidding war. In fact, Carlyle even inspected the lines of KCSM as part of what was termed, "due diligence."

There’s more.

THE MEXICAN POLITICOS

Back in October 2003 --  just weeks after Morgan went from the STB to Covington & Burling --  Kissinger McLarty & Associates entered a global strategic alliance with Covington & Burling. The Kissinger is Henry, the former Nixon administration globe-trotting secretary of state.

This was about the time that Kissinger McLarty & Associates -- specifically, Mack McLarty -- was advising BNSF on strategic transportation issues in Mexico. Apparently, McLarty jumped ship to UP, leaving, according to a source, BNSF Chairman Matt Rose in a snit.

Now comes the Nov. 21 appointment of Luis Tellez, former head of the Carlyle Group’s Mexico operation, as Mexico’s secretary of transportation, with regulatory oversight of Mexican rail operations. Tellez is a former chief of staff to Mexican President (1994-2000) Ernesto Zedillo, who previously served on UP’s board of directors.

As for Tellez, he previously was on the board of directors of Grupo Mexico, which controls a smaller Mexican railroad, FerroMex, that just happens to be 27 percent owned by UP. Interestingly, Tellez joined the Carlyle Group in Mexico as an adviser just prior to Carlyle’s unsuccessful 2003 attempt to acquire control of KCSM.

KCSM AND LAZARO CARDENAS

Here is why KCSM is so coveted a prize:

*  KCSM controls all tracks into and out of the Port of Lazaro Cardenas.

*  The Port Lazaro Cardenas is blessed with a deepwater channel sufficient to handle the largest of container ships;

*  KCSM already has acquired land adjacent to the port under a zero-price, long-term agreement;

*  Port operator Hutchinson Wampoa is investing in a 10-fold port-capacity expansion;

*  Wal-Mart, whose second biggest market is Mexico, has it’s eyes on Lazara Cardenas as a crucial North American port of entry.

*  Analysts at UBS project KCSM revenue from Lazaro Cardenas rail traffic will soar from some $30 million in 2007 to almost $100 million by 2015, and $255 million by 2025;

*  In terms of lifts, UBS projects an almost two-million 20-foot equivalent container throughput by 2025, compared with some nine million currently at Long Beach/Los Angeles, 1.8 million at Seattle, and some 1.5 million at Oakland. The U.S. West Coast ports, meanwhile, already are operating at near capacity with little room for expansion;

*  The rail route from Lazaro Cardenas to Chicago or Kansas City is roughly equivalent in length to the rail routes from congested Long Beach; is 600 miles shorter to Houston and closer to Atlanta. The port also is the closest to the population-dense Mexico City;

*  CP Ships, NYK Lines, Maersk and APL already serve the port; and,

*  Lazaro Cardenas enjoys a substantial labor-cost advantage -- its per-lift costs being some 30 percent cheaper than at U.S. West Coast ports.

Indeed, KCSM, with its sole rail access to the Port of Lazaro Cardenas, is a modern-day Hope diamond; but prying it loose from KCS may be equivalent to freeing Excalibur. And that is why UP’s superior political connections are essential

BNSF remains interested; but UP, while not awash in cash as is BNSF, has something more valuable --  its new-found cash-rich Carlyle Group and Carlyle’s similarly extraordinary political connections. No wonder BNSF’s Matt Rose is so irritated.

Who said railroads had become a mature and financially boring industry?

(The preceding opinion article was published in Association Highlights, a publication of the Association of Transportation Law Professionals. The article does not necessarily express the opinion of the association.)"