July 11th Bloomberg Businessweek.

Julius Malema, head of the ANC Youth, who "has long wielded a powerful influence over the ruling party" is calling for nationalization of South African mines and banks. Lots of subsequent additional media attacking Malema, but this has to be worrying for SA Miners. Add this to the challenge of a secure and dependable electical supply in SA. Has to make Canadian RoF Chromite look more attractive for long term investments.

Julius Malema, the youth leader of South Africa’s ruling party, is rattling investors and stoking racial tension with his declaration of war on “white monopoly capital” and calls for government seizure of mines and banks.

Malema’s views resonate among the 50 percent of young black South Africans who are unemployed and whose living conditions have improved little in the 17 years since the end of apartheid.

While the African National Congress has distanced itself from Malema’s proposals, it has done little to call him to order.

It is getting harder to dismiss Malema as a sideshow in South African politics, Bloomberg BusinessWeek reports in its July 11 issue.

Business Leadership South Africa, an association of the heads of 87 of the largest companies operating in the country, and the Chamber of Mines warned last month that nationalization of the country’s resources would be catastrophic for the economy.

Both groups, whose members include Anglo American Plc (AGL) and AngloGold Ashanti Ltd. (ANG), usually lobby behind closed doors.

“Large swathes of the South African population don’t know that this is very much a tried-and-tested route to disaster,” Michael Spicer, the chief executive of Johannesburg-based Business Leadership, said in a June 28 interview. There is “a cost in growth forgone, in investment foregone and employment foregone. That’s an absolute observed reality.”

Malema, who helped President Jacob Zuma gain control of the ANC in 2007 and won a second term as the youth league’s leader unopposed at a conference last month, is flexing his political muscle as lobbying intensifies ahead of ANC elections next year.

While Zuma, 69, has said he is available to serve a second term as party president, Malema is warning the league will ditch leaders who don’t heed its call for a “radical policy shift.”

Malema, 30, declined a request for an interview.

“Foreign investors in South Africa ought to take these events seriously,” Sebastian Spio-Garbrah, Africa analyst at DaMina Advisors LLP in New York, said in e-mailed comments on June 23. “Zuma is in the end likely to forge a halfway compromise between the government’s current, relatively orthodox policy positions and the more radical proposals proffered by the ANC youth league.”

Zuma has pledged to create 5 million jobs by 2020 and slash the jobless rate to 15 percent from 25 percent, while reining in state spending and courting foreign investment.

“We would be very alert to the risk of nationalization,” Karl Leinberger, chief investment officer of Cape Town-based Coronation Fund Managers Ltd., which manages 231 billion rand ($35 billion), said in a June 27 interview. “We have very high levels of unemployment and poverty and when that is the background there will always be political risk, risk of populist policy, which will be damaging to business.”

The ANC, which won 66 percent of the vote in the country’s last national elections in 2009, last year commissioned an independent study on the viability of nationalization and plans to debate its findings next year.

“One of the things that people are beginning to learn about South Africa is how well we are able to engage in robust debates on very sensitive matters, but come out with an outcome at the end of the day that spells stability,” Deputy Finance Minister Nhalnhla Nene told reporters in Cape Town on June 29.

Meanwhile, the government has established a state mining company, African Exploration Mining and Finance Corp., which plans to extract minerals such as coal and uranium.

It is also setting up a state bank that will compete with lenders such as Standard Bank Group Ltd. and Nedbank Group Ltd. (NED)

Mining accounts for about 8.8 percent of South Africa’s gross domestic product. The country has the world’s largest reserves of platinum, chrome ore and manganese. Citigroup Inc. has valued its total mineral resources at $2.5 trillion.

“The risk associated with future investment in South African mining has increased considerably as seen from the outside world” because of the nationalization debate, David Brown, chief executive officer of Johannesburg-based Impala Platinum Holdings Ltd. (IMP), the world’s second-biggest platinum producer, said on June 28.

“Many of South Africa’s mining companies have operations which have 30- to 50-year lives,” Roger Baxter, chief economist at the Johannesburg-based Chamber of Mines, said in a June 28 interview. “Companies are going to be more reluctant to invest if there is any threat of expropriation.”

Similar concerns were voiced by Sim Tshabalala, chief executive of Standard Bank’s South African unit. “If the nationalization debate grinds on for many more months, there will be fewer new businesses, fewer new jobs, more poverty and less development for decades to come,” he wrote in Johannesburg’s Business Day on July 7.

Such arguments hold little sway with Malema, whose upbringing by his domestic-worker mother in a shanty town in the northern province of Limpopo and background as a student leader equipped him to tap into popular discontent.

“The real enemy is white-monopoly capital,” Malema, who is driven around in a Range Rover, told more than 5,000 cheering delegates at a youth league conference in Johannesburg on June 20. “They are the ones we are fighting against. In whose hands is this wealth? In whites’.”

Malema may unravel Nelson Mandela’s legacy of a non-racial and inclusive society, said Helen Zille, head of the country’s main opposition party.

Mandela, who spent 27 years in jail for plotting the overthrow of apartheid, won a Nobel Peace prize for leading South Africa from the brink of civil war to its first democratic elections in 1994 by advocating racial reconciliation. He served as president from 1994 until 1999.

Malema’s “aim is to obliterate the historical compact we achieved in the mid-1990s,” Zille, leader of the Democratic Alliance, said in a June 29 opinion piece in Business Day. “He has, singlehandedly, positioned the ANC as a racial, nationalist party, exclusive, uncompromising, insatiable in its lust for power.”

Whites account for about 9.2 percent of South Africa’s 50 million people, government data shows.

About 45 percent of the market capitalization of the Johannesburg stock exchange and 55 percent of the country’s land is owned by white South Africans, according to the Institute for Race Relations.

“Malema is driving a real racial schism in the country,” Frans Cronje, deputy chief executive officer of the Johannesburg-based institute, said in a June 28 interview. “It doesn’t take a majority of black South Africans in order to drag the country into a racial mess. It takes a few characters like Malema with the tacit consent of the ANC.”