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France’s Alstom wins $5.8-billion South Africa train deal

An Alstom SA TGV (high speed train) at the firm’s factory in Belfort, eastern France in 2003. Alstom has won a $5.8-billion contract to build 3,600 new passenger cars for South Africa.

VINCENT KESSLER/REUTERS

French transport and engineering group Alstom SA has won a $5.8-billion (U.S.) contract to supply passenger trains to South Africa, one of the largest government deals ever in Africa's biggest economy.

Under the 10-year program, Alstom will build 3,600 new train cars to help overhaul South Africa's outdated rail network.

The contract will also create around 33,000 jobs, with Alstom required to build a manufacturing plant in South Africa, the head of the country's state rail agency said on Wednesday, adding the French company was chosen over rival bidders because of its competitive pricing and technological ability.

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"We're not just buying trains, we are creating jobs and we are also revitalizing our rail engineering industry," Lucky Montana, chief executive officer of the Passenger Rail Agency of South Africa, told a news conference.

He did not give details on the pricing of Alstom's bid.

Other bidders for the 51-billion rand contract included Canada's Bombardier, Spain's CAF , Switzerland's Stadler Rail, China North Rail and China South Rail.

About 90 per cent of the South African rail agency's train cars date back to the 1950s. The country is on a drive to update its trains and improve public transport for the millions of poor who are without cars.

The contract is the biggest rail deal currently in the works anywhere in the world, according to one industry source.

The first batch of trains is expected to be delivered in mid-2015.

Shares of Alstom rose on the news and were up 2.8 per cent at 1455 GMT.

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