CSR unit wins $2.1b deal in South Africa

The exhibition hall for locomotive models at CSR Zhuzhou Electric Locomotive Co. The leading Chinese rolling stock manufacturer will provide electric locomotives valued at $2.1 billion to state-owned South African logistics company Transnet SOC Ltd, the largest export deal for the Chinese manufacturer. Long Hongtao / Xinhua

Rolling stock manufacturer CSR Corp Ltd got a boost in its share price after a subsidiary announced on Monday that it won a bid to supply electric locomotives in South Africa.

CSR Zhuzhou Electric Locomotive Co will provide electric locomotives valued at $2.1 billion to state-owned South African logistics company Transnet SOC Ltd, the largest export deal for the Chinese manufacturer.

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On Tuesday, CSR shares jumped 13.1 percent to HK$6.3 (80 cents) in Hong Kong and nearly 4.7 percent to 4.4 yuan (70 cents) in Shanghai.

Most of the locomotives will be used to transport coal and ore in South Africa. The six-axle locomotives can haul freight trains at up to 100 kilometers per hour, according to CSR Corp.

The subsidiary, based in Zhuzhou in central China's Hunan province, will transfer technology for electric locomotive manufacturing to South Africa. More than 60 percent of the parts and components will be produced in South Africa.

This isn't the first deal in South Africa for CSR, one of China's top two locomotive and rolling stock producers.

In 2012, the Zhuzhou-based company won a bid to provide 95 electric locomotives to Transnet.

Zhou Qinhe, general manager of CSR Zhuzhou, said this project can greatly improve the efficiency of freight and rail operations in South Africa and provide technology transfers.

"It is a key step for China's high-end equipment manufacturing industry to establish a good reputation for 'Made in China' overseas," he added.

With demand from developed countries weak, China's rolling stock companies are increasingly targeting new emerging markets such as South Africa.

Rival China CNR Corp Ltd has also won a contract worth about $800 million from Transnet, which is in the middle of a seven-year plan to shift freight from the roads to the rail system, the China News Service reported.

Two other global manufacturers, Bombardier Inc and General Electric Co, are also part of Transnet's plan.

Local media reports said Bombardier and GE will supply 240 electric and 233 diesel locomotives, respectively, to Transnet.

So far, CSR Zhuzhou has won orders worth $2.5 billion for electric locomotives from South Africa.

China became South Africa's trading partner in 2009. Bilateral trade increased 32 percent last year to 270 billion rand ($25 billion).

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