October 14, 2010 / 12:48 AM / 9 years ago

Mexican drug gangs expand into illegal mining

MEXICO CITY (Reuters) - A Mexican drug cartel already raking in hefty profits trafficking narcotics to the United States has discovered a new business in the western state of Michoacan — illegal mining.

A major money launderer from Mexico’s La Familia drug cartel arrested on Wednesday allegedly ran a side businesses “selling natural mineral resources illegally extracted from the mountains along the coast of Michoacan.”

“Theft of minerals in the region has been increasing in recent years,” the attorney general’s office said in a statement.

Ignacio Lopez, captured along with three associates, is also accused of managing cash earned from La Familia’s extortions of local residents and businesses, kidnapping operations and drug smuggling.

Lopez built relationships with “at least three important, established international companies in Mexico” that export iron ore to China, the statement said. The companies exported 1.1 million tons of iron ore this year worth $42 million.

Government officials were not immediately available to give more details.

Michoacan is largely controlled by La Familia, a tight-knit group of traffickers who hold power in the state with a menacing mix of brutal violence and a pseudo-religious philosophy.

Lopez, who was deported from the United States in 1991 for trafficking heroin, was captured with a Chinese-made AK-47 assault rifle engraved with the words “The Mafia never forgives” and a pistol that said “Killa.”

Mexico, a major copper and silver producer, has an active mining industry with hundreds of mining companies extracting and exploring for minerals across the country.

The mountains ranges in Michoacan are rich in iron ore, gold, copper, zinc and silver.

So far mining investors have not been put off by Mexico’s raging drug war, which has killed more than 29,000 people in less than four years as rival cartels battle each other and government forces. Although some junior miners have said they avoid exploration projects in remote areas controlled by traffickers.

Reporting by Mica Rosenberg; Editing by Richard Chang

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