BARLOWORLD and Electro-Motive Diesel (EMD), a subsidiary of US-based Progress Rail Services, which is part of the Caterpillar group, launched a joint venture yesterday to service sub-Saharan railway markets.

The new venture, Electro-Motive Diesel Africa, will provide locomotives and railway products and services, including access to advanced diesel and emissions technology. It will be headed up by Sibani Mngomezulu, most recently the executive director responsible for risk and strategy at Barloworld's equipment division.

The deal comes as Transnet and the Passenger Rail Agency of SA are set to spend hundreds of billions of rands over forthcoming decades, and ahead of this week's Africa Rail conference in Johannesburg, sponsored by EMD.

"We like Africa - and think there are lots of opportunities," William Ainsworth, CEO of Progress Rail Services said.

He said with business confidence returning to SA, and Africa's stellar growth rates, Caterpillar would seek to "aggressively" grow its markets in power systems, railway products and services and mining equipment.

In 2006, Caterpillar bought Progress Rail Services, and in 2010 it added EMD.

"These are key investment sectors for Cat (in the) long-term," Mr Ainsworth said.

"The most efficient way to move commodities is by rail."

He also said Electro-Motive Diesel Africa would invest significantly in SA, driving local content and skills, and creating jobs. It would leverage Barloworld's existing resources in the region, and those of EMD, which had "the largest installed base of locomotives worldwide".

"We are proud to partner with EMD, the global leader in diesel-electric locomotives," Clive Thomson, Barloworld CEO, said.

"We have every confidence that under Sibani's leadership the Electro-Motive Diesel Africa team will realise their vision of becoming the rail-solutions provider of choice in SA and the region."

He said the venture into rail was consistent with group strategy to invest in growth sectors.

Barloworld is the official Caterpillar dealer in Southern Africa, providing sales, service and support for heavy earth-moving equipment.

It has also bought the rights to sell and service former Bucyrus mining vehicle and handling products in the region, after Caterpillar bought US-based Bucyrus in July last year for about $8,8bn.

EMD built 50 locomotives for Transnet Rail Engineering between 2009 and 2010, and had retained an office in SA.

It already had about 800 locomotives running in SA.

This was part of a legacy build programme that took place in Port Elizabeth before the then owner, General Motors, disinvested from the country during the apartheid era.

"Africa is an important market for us and the joint venture with an established company, such as Barloworld in southern Africa will position us well to support the needs of existing and new customers in SA and the region," Mr Ainsworth said.