The brewer said on Monday that construction would begin this year and that the plant is expected to produce 130,000 tons of malted barley a year once it is completed in 2015.
SAB beer division MD Mauricio Leyva said in a statement that the construction of the plant was an important development for the company.
"The new maltings plant will have significant cost saving and growth benefits for SAB," Mr Leyva said. "It makes good financial sense to undertake this investment. It will allow us to reduce our exposure to volatile international markets and replace a significant share of our imported malt and barley with local barley."
SAB currently sources about 65 percent of its barley locally and, once the new maltings plant is up and running, this will potentially increase to between 90 and 95 percent.
"We have been looking at ways to locally source more of our agricultural raw materials, including barley, for some time, building on the work we have been doing with our Barley Breeding Programme and with local farmers to develop competitive local barley varieties," Leyva said.
Additional barley trials have been undertaken in the North West and with emerging farmers in Limpopo.
Mr Leyva said: "We will work with leading suppliers to ensure an innovative and cost-efficient design using cutting-edge technology. We will also strive to ensure we maximise local industry involvement in the construction of the new plant to help develop the communities in which we operate."
SAB currently has two malting plants, one at Caledon in the Western Cape which malts about 180,000 tonnes of barley a year and an existing plant at Alrode, which malts about 40,000 tonnes a year.
SAB executive chairman Norman Adami said the new plant was a win-win scenario and showed SAB's clear commitment to working for South African society. "It will allow us to drive even higher local sourcing of barley which will, in turn, help drive the empowerment of small farmers in some of the most poverty stricken areas of SA," he said.
The company's Alrode plant is about 40 years old and nearing the end of its economic life. It will be decommissioned once the new plant is fully operational.
Copyright is owned by Africa Outlook and/or Outlook Publishing. All rights reserved.