"This tender is historic," Public Enterprises Minister Malusi Gigaba told reporters at Transnet Freight Rail's Capital Park depot in Pretoria.

Seventy percent of the deal would go to CSR Zhuzhou Electric Locomotive (CSR) and 30 percent to South African consortium Matsetse Basadi.

"This deal will make South Africa part of the global supply and manufacturing chain."

Gigaba said the rail system remained the key to improving trade, lowered carbon footprints, and also reduced road traffic.

"The last two decades have seen a migration from rail to road."

To reverse this, the railways had to improve quality.

The first batch of locomotives would be delivered to Transnet Freight Rail by December 2013 and the last batch was planned for September 2014.

The parties committed to produce most of the locomotives locally.

The first 10 locomotives would be assembled in CSR's factories in China while the remainder would be made in South Africa.

The purchase was part of Transnet's long-term renewal programme to increase capacity while also improving the average age of its fleet, Gigaba said.

Transnet invited additional proposals for the supply of 1064 locomotives.

"These are to meet and maintain the market demand strategy volumes targets in line with the company's R300 billion seven-year investment programme," the company said in a statement.