Text of report in English by official Chinese news agency Xinhua (New China News Agency)

["China Exclusive: Construction Starts on Railroad Linking China, Mongolia, Russia" - Xinhua headline]

Shenyang, Nov. 10 (Xinhua) - China on Saturday began construction of a rail road which will run across northeast China and eastern Mongolia and eventually lead to Russia.

The railway, dubbed an "energy line", would carry coal from north China's Inner Mongolia Autonomous Region and neighbouring Mongolia, and the growing the rising number of trade items between the two countries.

The project is planned to undergo three phases of construction.

The first phase involves a 487-km section from Xinqiu, Fuxin City, of northeast China's Liaoning Province, to Bayan Ul in northern Inner Mongolia, said Wang Chuncheng, chairman of Liaoning Chuncheng Industry and Trade Group and a major investor of the first phase of the project.

At a cost of nearly 5.9 billion yuan (790 million US dollars), the first-phase construction was expected to be completed in 2010.

The Xinqiu-Bayan Ul railway, the longest of the three sections, would have an annual handling capacity of 12 million tons within three to five years. This would increase to 25 million tons in five to ten years and 35 million tons in ten to 15 years, said Wang.

"After this section becomes operational, a large amount of coal in Inner Mongolia can be transported to Liaoning, which is in great need of coal under the country's drive to rejuvenate northeast China's old industrial base," said Pan Liguo, mayor of Fuxin City, adding that the province would face a shortage of 116 million tons of coal by 2010.

Inner Mongolia is famous for coal resources. In Xi Ujimqin Banner alone, where Bayan Ul is located, a total of 20 billion tons of coal has been discovered in three basins.

"But the current road transport can only handle one million tons of coal a year, which is far from the annual coal output," said Wang Chuncheng.

"More coal will be mined and taken out of Inner Mongolia with the support of funds and mining technologies from Liaoning Province," Pan said.

The second phase of construction would lead the railway from Bayan Ul northward to Zhuengadabuqi Port, on the border of Mongolia, about 230 km long. The third section would stretch northward to Choibalsan City, Mongolia, where it would join the railway to Russia's Borzya, said Pan.

He said the blueprint for the second and the third phases was yet to be worked out, but the main investors have been confirmed.

When completed, the railway would be connected to the line leading to Jinzhou Port, in Liaoning, providing inland Mongolia a convenient sea access and cutting almost 1,000 km from the present route by way of Inner Mongolia's Erenhot Port and the northern Tianjin Port.

"The railway, connecting Mongolia's inland port with China's sea port, will contribute to fluid transportation of China's merchandise and agricultural products to Mongolia. It will also provide Mongolia more convenient shipment of its abundant coal and other resources by sea," said Lu Chao, researcher of the institute for borderland history and geography studies at Liaoning Academy of Social Sciences.