The plan which is expected to progressively amass $US8.5 billion in registered capital will construct and operate rail infrastructure in northern provinces such as Inner Mongolia, Shaanxi, Henan, Hubei and Hunan.

The integrated transportation system is being planned as a means of facilitating the purchase and distribution of coal from expanding northern mines to more southerly end users.

China’s second largest miner said the project would allow for a high efficiency system of sales and logistics, consolidating market development along the railway.

China Coal will own a 10% stake in the entity responsible for the project known as Mengxi-Huazhong Railway. China Railway Investment will own a 20% interest while 14 other promoters will claim the remaining 70% in the joint venture.

The investment represents an overarching strategy in China to increase the fluidity of coal assets with the country, particularly from the more rural, coal-rich regions of the north to the large population centers in the south.

According to Reuters, China intends to boos coal production in its northern provinces to 2.2 billion tonnes by 2015.

Beijing-based China Coal owns 12 coal mines and is the world’s third largest coal mining enterprise.