South African Mine Mayhem Helps Malema Stage Political Comeback

Julius Malema, the youth leader who was thrown out of South Africa’s ruling party for sowing discord, is using the most deadly mine violence since the end of apartheid to stage a political comeback.

An advocate of nationalizing mines, Malema, 31, is positioning himself as a champion of the miners’ fight for better wages and living conditions in the wake of the killing of 34 striking workers by police at Lonmin Plc (LMI)’s Marikana mine on Aug. 16. Platinum prices have risen 19 percent since the violence, and labor unrest has spread to operations owned by Gold Fields Ltd. (GFI) and Anglo American Platinum Ltd. (AMS)

“As a tactician and as a person who reads the zeitgeist of the moment, Julius Malema is unmatched,” Nic Borain, a political analyst based in Cape Town who advises BNP Paribas (BNP) and Cadiz Securities, said in a phone interview. The Marikana killings and labor unrest “has thrown him a political lifeline.”

The African National Congress has been unable to muzzle Malema after expelling him in March as he campaigns to oust President Jacob Zuma, his former ally, at the party’s elective conference in December. Malema has called for a general strike, stoking tensions at a time when South Africa, producer of 75 percent of the world’s platinum, is at risk of being downgraded by Moody’s Investors Services, Fitch Ratings and Standard & Poor’s.

Speaking to about 60 soldiers in Johannesburg on Sept. 12, Malema called South Africa a “banana republic” and Zuma a dictator.

Presidential Lobbying

“These are the symptoms of dictatorship, a political principal in the form of a president becoming more rich and rich, and those that he is leading becoming more poorer and poorer,” he said, the Johannesburg-based South African Press Association reported.

Malema is lobbying for Deputy President Kgalema Motlanthe to replace Zuma in December. The ANC, which led the fight against white segregationist rule, has dominated South African politics since taking power under Nelson Mandela in the first all-race elections in 1994, controlling almost two-thirds of the seats in Parliament. Under ANC rules, the party’s leader will be its candidate for president in elections scheduled for 2014.

“Our economy must grow and create more jobs to absorb the many unemployed and improve the standards of living,” Zuma told lawmakers in Cape Town yesterday. “Worker demands for better wages can and should be addressed within the country’s labor relations framework. The illegal strikes, the incitement and intimidation will not assist workers.”

‘Fanning Flames’

Since the killing of mineworkers last month, Malema has addressed miners at Marikana, Gold One International Ltd. (GDO)’s Modder East gold mine and Gold Fields’ (GFI) KDC gold-mining complex, Africa’s largest, and urged them to make the industry “ungovernable.” More than 40,000 workers were on strike or absent from work yesterday at operations owned by Anglo American Platinum, the world’s biggest platinum producer, Lonmin and Gold Fields.

“He is not responsible for the crisis, but he is fanning the flames because he sees it as an opportunity to promote himself,” Claude Baissac, the founder of Johannesburg-based country-risk consultants Eunomix, said by phone. “He has to exploit whatever dissent there is.”

Malema has also used the killings at Marikana to attack Cyril Ramaphosa, a former politician and one of South Africa’s richest black businessmen who headed the ANC committee that finalized his expulsion from the party. Ramaphosa owns a stake in Lonmin’s mine.

‘Political Connection’

“Lonmin had a high political connection; that is why our people were killed,” Malema told miners on Aug. 18, according to Sapa. “They were killed to protect the shares of Cyril Ramaphosa.”

Mining accounts for two-thirds of exports in South Africa, Africa’s largest gold producer, and employs about 500,000 of the nation’s 50.6 million people, according to the Chamber of Mines. Prolonged mine unrest would curb growth at a time when a global slowdown is eroding demand for exports, undermining government efforts to cut a 25 percent unemployment rate.

Malema’s political clout may be over-estimated due to his high media profile, said Keith Gottschalk, a politics lecturer as the University of the Western Cape in Cape Town.

“Since Malema is no longer invited to ANC meetings, he realizes the way of getting bigger headlines than anyone else is to be present wherever there is a crisis,” Gottschalk said in a phone interview. “I doubt he will be able to revive his political career.”

Legal Troubles

Malema is also facing legal troubles, with both the police anti-corruption unit and the tax agency investigating him over his business dealings.

Since his expulsion from the ANC, Malema’s supporters have formed an organization known as Friends of the Youth League to promote his calls for a radical policy shift to create jobs, address inequality and give the black majority a bigger stake in Africa’s largest economy.

“Malema is surprisingly popular and we cannot dismiss his call” for more strikes, Peter Attard Montalto, an economist at Nomura International Plc in London, said in e-mailed comments. “The mining industry can be effectively brought to a near standstill simply by drillers striking, and they account for only a small fraction of the subterranean workforce.”

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net;

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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