The plant, which is a joint venture between the SA government, through Pelchem, and Lonza, will be established near Pelindaba in Gauteng, the Times Live said.
Ketlaphela, once it starts up in 2016, is expected to improve the security of supply of priority drugs, as well as stabilise the price of these.
The Ketlaphela project is expected to create an estimated 2600 jobs.
South Africa currently imports the APIs needed to manufacture antiretrovirals.
Science Minister Naledi Pandor said that the joint venture, named Ketlaphela, will establish the first pharmaceutical plant to manufacture active pharmaceutical ingredients (APIs) for antiretroviral medicines in South Africa.