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Zuma Rejects Criticism of Handling of Lonmin Mine Deaths

South African President Jacob Zuma rejected criticism that his handling of the most lethal police action since the end of apartheid has hurt investor confidence in the world’s biggest platinum producer.

In his first television interview on the shooting and killing of 34 mineworkers during an illegal strike at Lonmin Plc (LMI)’s Marikana mine on Aug. 16, Zuma told Bloomberg TV yesterday that he has taken decisive steps to show that his government is in control. Those include creating a judicial inquiry and a committee of cabinet ministers to investigate the violence, he said. Zuma said he won’t fire his police commissioner.

“Our observation is that nothing has happened to investor confidence,” Zuma, 70, said in an interview at his offices in Cape Town. “I am convinced that the action that was taken so far helped to show South Africa is in control.”

The violence highlighted investor concern about law and order in an economy that relies on mining for almost two-thirds of its exports. The rand fell as much as 1.8 percent against the dollar on the day the number of dead was announced, more than any of the more than 25 emerging-market currencies monitored by Bloomberg.

“The global community has to look at what happened based on facts,” Zuma said. “We are talking about an incident that took two to three minutes and government moved immediately and we are in control of the situation. If I was an international, global observer, why should I get worried? You could get worried if there is continuous fighting and killing.”

Murder Rate

Zuma is struggling to restore public trust in policing in a nation where 43 people are murdered every day. Since taking office in May 2009, Zuma has fired two police chiefs implicated in graft and the head of crime intelligence has been suspended while he’s being investigated for abusing state funds. South Africa’s murder rate is more than six times that of the U.S.

Fitch Ratings, Standard & Poor’s and Moody’s Investors Service already have a negative outlook on South African debt as slower economic growth this year makes it difficult for the government to stick to its budget deficit targets. Finance Minister Pravin Gordhan said on Aug. 16 he will probably lower the government’s growth forecast in coming months after predicting 2.7 percent expansion for this year.

Automatic Weapons

The police killings “will make it more difficult for South Africa to attract foreign investment,” Carmen Altenkirch, a sovereign analyst at Fitch Ratings in London, said by phone on Aug. 17.

Police opened fire with automatic weapons on a crowd of about 3,000 workers, many of who were armed with spears, traditional fighting sticks and machetes after a six-day standoff. Ten people, including two police officers, had already died at the mine in fighting between members of rival labor unions in the week before the shooting.

Police commissioner, Riah Phiyega, who was appointed two months ago without any prior policing experience, said on Aug. 17 officers had acted in self defense after shots were fired from the crowd that was being dispersed with water cannons and tear gas. Police used live ammunition and automatic weapons after first firing rubber bullets, she said.

Zuma rejected calls from security analysts and human rights groups for Phiyega and Police Minister Nathi Mthethwa to be fired as the judicial panel hasn’t done its investigation.

Judicial Inquiry

“That is one of the most unfortunate things, in my view, that when things happen, people demand a resignation,” the president said. “It’s not totally responsible when you don’t know the facts. We have to wait and hear what the account of the police is going to be.”

The judicial inquiry will move quickly to investigate the incident and take action against individuals where necessary, he said.

“People will be held accountable,” Zuma said. “Once we get to the bottom of what the truth is, there must be consequences. This cannot be allowed to continue.”

The commission of inquiry, which has been backed by opposition political parties, business groups and labor unions, may help to restore confidence in policing.

“More good is going to come out of this than bad,” Peter Major, head of mining at South Africa’s Cadiz Corporate Solutions, which advises companies on acquisitions and divestments, said in a phone interview from Cape Town yesterday. “Everybody is going to look like a culprit. I don’t think anyone will be able to sit down and point fingers at anyone else.”

Lonmin Ultimatum

Zuma criticized London-based Lonmin for threatening to fire striking workers four days after the police shooting, saying the company was “insensitive.” The mining company is losing about 2,500 ounces of platinum production, worth about $3.75 million at current prices, for every day of strike action.

“You make such ultimatums when there is just a strike, but when so many people have died, when people who have been with strikers have died, scores of people, I just think it was unfortunate,” Zuma said.

Lonmin yesterday backed down from its plan to fire striking workers. Of the 28,000 workers at the mine, 22 percent reported for duty today, compared with 33 percent yesterday, spokeswoman Susan Vey said. Lonmin shares have plunged 13 percent since the day before the shootings and were trading at 602 pence as of 1:03 p.m. in London.

To contact the reporters on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net; Nasreen Seria in Johannesburg at nseria@bloomberg.net

To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

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