Mexican Drug Cartels Move Into Mining Industry, Take Over Even More Of Country's Economy

The Associated Press reported over the weekend that Mexican officials have confirmed that two drug cartels, the Knights Templar and La Familia, have extended their influence into the iron ore mining industry in three states along Mexico's Pacific coast. As the amount of iron ore exported to China has quadrupled between 2008 and 2013, with 4.6 million tons shipped in the last half of 2012 and the first half of 2013, the cartels have been acquiring iron ore shipments either by theft or extortion or by illegally extracting the mineral themselves, according to state residents, mining companies and federal officials. The government's admission of what was once thought to be a wild rumor underscores the degree to which cartels have extended their influence in the state's economy.

"Since 2010, evidence surfaced of irregular mining of iron in the states of Jalisco, Michoacán and Colima," said the Mexican Economy Department via the AP in a statement. "That illegal activity was encouraged by the great demand for iron by countries such as China, to develop their industries," the statement said. "Many trading companies began to build up big stockpiles of legally and illegally obtained iron (ore), that was later shipped out for export." The problem was so severe, the Economy Department said, that the government tightened rules on exporters in 2011 and 2012 to make them prove that they were getting their ore from legitimate sources. Many of them couldn't do it -- in 2012, 13 companies saw their export applications denied.

The state of Michoacán, where citizen self-defense groups have taken up arms against the cartels in towns where they exercise de facto control, has seen a particularly large degree of illicit activity. Its port Lázaro Cárdenas, the second-largest in Mexico, was occupied by the military on Nov. 4 in an attempt by the government to cut off the cartels' export trade. "This is the terrible thing about this process of (the cartel's) taking control of and reconfiguring the state," said Guillermo Valdes Castellanos, former director of CISEN, the country's top domestic intelligence agency via the AP. "They managed to impose a Mafia-style control of organized crime, and the different social groups like port authorities, transnational companies and local landowners, had to get in line." Valdes Castellanos said that as far back as 2010, La Familia was known to steal ore from mines under concession to private mining companies, sometimes with the complicity or aid of local farmers and landowners, and sell it to processors, distributors and even foreign firms.