A mining site in Michoacan

Mexico's Knights Templar criminal organization is exerting control over the mining process for iron that supplies the Chinese market, offering another example of how the group has extended its reach into diverse sectors of the Mexican economy.

Mexican authorities say local drug cartels, particularly the Knights Templar, are profiting from the country's lucrative mining sector, reported the Associated Press. The group now is involved in various aspects of the mining and export process for iron headed to Chinese factories from the group's home state of Michoacan. They allegedly obtain iron through extortion and robbery, as well as illegally extracting the metal themselves and selling it to export companies.

As early as 2010, Mexico's Attorney General's office found that international companies working in Mexico with connections to the Familia Michoacana exported an estimated 1.1 million tons of iron that year.

According to official statistics, iron exports to China quadrupled between 2008 and the first half of 2013, and currently average about 4.6 million tons annually. Over the same time period, the Lazaro Cardenas port in Michoacan has risen to become the most important export point for the material, accounting for almost half of all China-bound iron shipments as of mid-2013.

InSight Crime Analysis

Since rising from the remnants of the Familia Michoacana in 2011, the Knights Templar has become one of Mexico's most powerful cartels, effectively controlling the western state of Michoacan. The organization's incursion into the mining industry appears to be the latest extension of its use of extortion and economic leverage to protect its interests and maintain power over industries in the region.

See Also: Knights Templar News and Profile

Cartels have been involved in Michoacan's mining industry for several years, and officials reported in August that criminal organizations now control mining in at least five Mexican states. Federal sources cited by the Associated Press said they were aware of cartel involvement in mining as far back as 2010.

Despite this, the authorities apparently took little action until November this year, when the government sent troops into Lazaro Cardenas, acknowledging the Knights Templar controlled much of the activity at the country's second-largest port.

The expansion of criminal groups into the mining sector has also occurred in Colombia, where groups like the Revolutionary Armed Forces of Colombia (FARC) have turned it into a major source of funding. Like the FARC, the Knights Templar is likely looking toward mining as yet another income source for its increasingly diversified criminal portfolio.