Mexican drug cartels diversify, Mafia-style

Mexican soldiers enter the mine in the Mexican town of Aquila. Cartels are said to be making money from iron ore. Picture: AP

Mexican drug cartels looking to diversify long ago moved into oil theft, pirated goods, ­extortion and kidnapping – now they have entered the country’s lucrative mining industry, exporting iron ore to Chinese mills.

Tales of such large-scale illegal mining operations were thought to be rumours, but federal officials confirmed they had known about the cartels’ involvement in mining since 2010, and that a recent military takeover of Lazaro Cardenas, Mexico’s second-largest port, was aimed at cutting off the cartels’ export trade.

It has served as a wake-up call to Mexicans that drug traffickers have penetrated the economy at the highest levels, becoming true Mafia-style organisations.

The Knights Templar cartel and its predecessor, the La ­Familia drug gang, have been stealing or extorting shipments of iron ore, or illegally extracting the mineral themselves and selling it through Pacific coast ports, according to mining companies and federal officials. The cartel had already imposed demands for “protection payments” on many in Michoacan state, including shopkeepers, ranchers and farmers.

But so deeply entrenched was the cartel connection to mines, mills, ports, export firms and land holders that it took authorities three years to confront the phenomenon. Federal officials said they are looking to crack down on other ports where drug gangs are operating.

Guillermo Valdes Castellanos, the former head of the country’s top intelligence agency, said: “This is the terrible thing about this process of [the cartels] taking control of and reconfiguring the state.

“They managed to impose a Mafia-style control of organised crime, and the different social groups like port authorities, transnational companies and local landowners, had to get in line.”

Valdez Castellanos said even 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 farmers and landowners, then sell the ore to processors, distributors and even foreign firms.

Mexico’s economy department said the problem was so severe that it prompted the government to quietly toughen rules on exporters in 2011 and 2012 and make them prove they received their ore from recognised sources.

Many exporters were unable to. In 2012, the department denied export applications from 13 companies, because they did not meet the new rules. And the problem wasn’t just limited to Michoacan, or the Knights Templar cartel.

“Since 2010, evidence surfaced of irregular mining of iron in the states of Jalisco, Michoacan and Colima,” the department said in a statement.

“That illegal activity was encouraged by the great ­demand for iron by countries such as China, to develop their ­industries.”