State-owned Saudi Railway Organisation (SRO) has awarded a SAR2.7bn (approximately $720m) contract to a Chinese Civil Engineering Construction-led consortium to build the Riyadh-Qassim rail line.
The 500km rail section is part of the planned SAR20bn north-south railway which will reduce the north-south travel distance by 500km.
Once operational for freight services in 2010, the rail line will allow the movement of minerals from the planned phosphate and bauxite mining projects in the country's north to the processing and smelters on the Gulf coast.
With the new contract, the total investment in the project has come up to SAR15bn.
Other members of the consortium include two local firms, Al Ayuni and Al Abdulaziz Al Omer Establishment.
A passenger service, which is also under planning, is expected to be operational within two years.
The project is being funded by the state-owned Public Investment Fund.