Doubling of Mexico Mining Losses Sign of Growing Criminal Involvement

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Mexico’s iron and steel industries suffered losses of $1.3 billion in 2013 due to theft and illegal mining, illustrating the growing importance of the mining industry as a source of funding for criminal organizations.

Mexico’s National Committee of Iron and Steel (CANACERO) reported that 10 million tons of iron — sold at $100 per ton — were exported in 2013 by organized crime groups, which force legal miners out and then set up their own operations, reported Excelsior. Much of the illicit product is sent to China.

These figures represent a 100 percent increase in illegal exports and profits of iron since 2010, when criminal groups reportedly exported five million tons and made $500 million off the trade.

Meanwhile, the theft of steel products on Mexican highways by armed criminals looking to sell the goods on the black market amounted to an additional $300 million in losses.

Currently, the state of Nuevo Leon is one of the principal areas of concern for steel theft, with incidences of the crime rising 300 percent in 2013.

InSight Crime Analysis

Mexico’s criminal groups have become more deeply involved in illegal mining in recent years, as the fragmentation of major cartels and increased competition in the drug trade has caused a shift to alternative sources of financing. The most recent figures serve to highlight just how lucrative this involvement has become.

Among the hardest hit states are Tamaulipas, Chihuahua, Guerrerro, Morelos and Michoacan, where criminal groups now controlling mining iron, gold, silver, and copper mining. The Knights Templar criminal organization has profited particularly well from the iron trade, controlling various steps in the mining process for iron headed to China from their stronghold in the state of Michoacan, home to the port of Lazaro Cardenas — the principle point of export for the product.

SEE ALSO: Coverage of Mining

A similar phenomenon can be seen in Colombia, which has also experienced an increasingly atomized criminal landscape, where criminal organizations such as the Urabeños, the Rastrojos and the Revolutionary Armed Forces of Colombia (FARC) profit from both the extortion of mining companies and control over gold and tungsten extraction.

Peru also has a massive illegal gold industry, estimated to be worth up to $3 billion a year. However, unlike in Colombia and Mexico, illegal gold mining in Peru is largely unlicensed, rather than run by armed groups, though there are signs the industry could have ties to the drug trade.

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