"We will begin with the issuing of the cards to new applicants and those who need re-issuing of identity documents from July this year," she told reporters in Pretoria.
The South African company, Altech Card Solutions, had won the R40 million tender to supply the Government Printing Works (GPW) with card personalisation machines and an automated mailing solution, manufactured by DataCard in the US.
The leading identity card manufacturer, Gemalto Southern Africa, had won the Euro16m (about R199m) tender to supply pre-printed polycarbonate cards containing a contactless microchip.
"Through a rigorous tender process, GPW identified two world-class suppliers, each with extensive experience in their field...," said Pandor.
"The smart card is part of the national effort to consolidate the restoration, common citizenship and identity and dignity to our people," she said.
Pandor said it would take six or seven years to phase out the old identity documents (ID).
She said the identity card roll-out would start at 27 regional offices.
Director general Mkuseli Apleni said those who had fraudulent IDs were in trouble.
"This is a security-tight process... Hard luck to those with fraudulent documents."