South Africa’s Nationalization Push May Continue as Malema Set to Win Vote

Julius Malema, the firebrand youth leader of South Africa’s African National Congress, is likely to win re-election this week, keeping pressure on the ruling party to boost state control of the country’s mines.

All nine provincial sections named Malema, 30, as their candidate for president of the ANC Youth League, to be decided at the congress that runs from tomorrow to June 19. The former student leader has polarized the ruling party, lambasting opponents and making comments that many regarded as racist.

“This establishes him as a big shot,” Prince Mashele, executive director for the Johannesburg-based Centre for Politics and Research, said in an interview yesterday. The ANC leadership “will be having huge headaches now. They don’t know how to handle him. He has proven to be uncontrollable.”

Under Malema, the Youth League has campaigned for the nationalization of mines, banks and land, the last of which without compensation, threatening to deter investment in Africa’s biggest economy. South Africa’s mines, which include the world’s richest veins of platinum, chrome and manganese, are its biggest export earners.

While Malema’s aren’t part of the ANC’s mainstream views, his lobbying “is of great concern to investors,” John Meyer, the head of natural resources at London-based brokerage Fairfax I.S. Plc, said in an interview. “It would be fatal for the mining industry.”

Malema’s election may also worry South African President Jacob Zuma, who ousted former-President Thabo Mbeki as ANC leader with the help of the Youth League in 2007.

Mining Companies

Upset by a public reprimand from the president last year and little public support for his positions, Malema may not support Zuma for a second term, said Aubrey Matshiqi, a research fellow at the Johannesburg-based Helen Suzman Foundation.

South African mines are still largely owned by whites and foreigners and are failing to benefit the poor, the Youth League says.

The idea that the economy “can be transformed to address the massive unemployment, poverty and inequality crisis without the transfer of wealth from those who currently own it to the people as a whole is illusionary,” it said in a document due to be discussed at the conference.

When Malema visited neighboring Zimbabwe last year, he commended it for giving white-owned commercial farms to black subsistence farmers, a process that cost hundreds of thousands of jobs, slashed agricultural output and sent the economy into a decade of recession.

`Road to Ruin'

Anglo American Plc (AGL)’s Chief Executive Officer Cynthia Carroll said on Feb. 8 that giving private mines to the state in South Africa would be “the road to ruin” because international investors would pull funding from the country.

While the government has repeatedly said nationalization isn’t official policy, it has been unable to sideline Malema’s demands.

An ongoing ANC investigation into whether nationalization would work “was set up simply to kill off the debate on the left about mine nationalization,” Peter Attard Montalto, a London-based economist at Nomura Plc, wrote in an e-mailed note yesterday. Yet, the review may recommend increased mining taxes, greater black ownership of mines and “a more rapid expansion of the state-owned mining company,” he said.

Malema, who declined an interview request, was raised by his domestic-worker mother in Seshego, a township near Polokwane, the capital of the northern Limpopo province. He took seven years to get through high school, after repeating a year twice. Now, he is driven around in a white Range Rover, sporting colorful broad-collared shirts and wearing a Breitling watch.

‘Madam’

He has repeatedly called for whites to be stripped of their historical privileges to help poor blacks. ANC Secretary-General Gwede Mantashe said Malema cost the party votes from minorities, which make up a fifth of the population, in May 18 local elections, because of comments he made that were perceived by some as racist.

Before the polls, Malema labeled Helen Zille, the leader of the opposition Democratic Alliance, a “madam” and called party spokesman Lindiwe Mazibuko her “tea girl,” terms which referred to a master-servant relationship typical of white- minority rule. The DA’s share of the vote rose to 23.9 percent from 16.6 percent in 2009.

Still, Malema has escaped stronger rebuke from President Zuma and the ANC. “We won’t disown him” because of the comments, Mantashe said.

“If you cross swords with him you run the risk of a major battle with the Youth League,” said Mashele at the Centre for Politics and Research. “They have to tread gingerly. They are wary, because they know he wields a lot of influence.”

To contact the reporter on this story: Franz Wild in Johannesburg at fwild@bloomberg.net.

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.

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