South Africa’s Transnet has signed a Memorandum of Understanding (MoU) with Chinese locomotives manufacturer CSR Zhuzhou Electric Locomotive (CSR), who intends to set up manufacturing facilities in South Africa.
CSR’s South African facilities will offer the company the opportunities to expand into African Market with its production and maintenance of electric locomotives as well as core rail equipment and components.
Terms of the agreement
The MoU signing forms part of President Jacob Zuma’s official state visit to facilitate trade between the two countries. The agreement was signed in Beijing by Transnet Group Chief Executive Brian Molefe and CSR Chairman and President Zhou Qinghe and witnessed by President Zuma and his counterpart, President Xi Jinping.
In terms of the agreement, Transnet and CSR will contribute their respective expertise and will leverage their unique expertise and experience and provide access to the know-how of their highly qualified and specialised business divisions. The areas of possible cooperation include:
- The establishment of a research and development facility;
- The setting up of manufacturing plants in South Africa;
- Joint initiation and development of business opportunities in Africa;
- Skills transfer, including establishment of a training centre in South Africa; and
- Setting up a refurbishment and manufacturing plant.
Initially, Transnet will make available its manufacturing facilities in South Africa, while the OEM will provide the technology that will enable the manufacture and maintenance of locomotives and core rail components.
CSR will enter into a joint venture with Transnet and the entity will be based in South Africa. Transnet will facilitate the setting up and also investigate opportunities for free trade agreements between South Africa and China.
Looking ahead for Transnet
Molefe and a team of senior executives are part of the delegation of business leaders who accompanied President Zuma on his official state visit to China. Molefe is expected to conclude a similar agreement with another locomotive manufacturer, China CNR Corporation, which produces diesel locomotives.
CSR, which produce s electric locomotives, was one of four manufacturers which Transnet awarded a R50 billion contract for the building of 1064 locomotives earlier this year. The other three were China CNR Corporation, German-based Bombardier Transportation and United States’ General Electric.
In line with South Africa’s commitment to boost its manufacturing capacity, all the locomotives except 70 will be built at Transnet Engineering’s plants in Koedoespoort, Pretoria and Durban, driving South Africa’s regional integration objectives. Transnet Engineering is the company’s engineering, manufacturing and rolling stock maintenance division.
The award has stringent local content, skills development and training commitment s as dictated by the Supplier Development Programme, a government whose main goal is to localise the production of imported machinery and equipment. A key element of this is skills transfer that will transform Transnet Engineering into an OEM for locomotives.