Russian Railways (RZD) and the Mongolian transport ministry have signed a memorandum to begin construction of the Zuunbayan-Dalanzadgad (Tavantolgoy) rail line in Mongolia.
The new railway will start at Dzüünbayan and will run west to the Omnogovi regional capital at Dalanzagdad, parallel to the Chinese border.
The surveying and detailed design work will begin in November with RZD committing $250m to finance the work.
The new railway is expected to open up mineral deposits in the South Gobi area and facilitate the export of Mongolian raw materials to China, Japan and South Korea as well as to other countries via Russia's Far East ports.
The rail line will be promoted by Infrastructure Development, a company with 50% RZD stake, 25% Mongolian firm Erdenes MGL stake and 25% Mongolian Railway stake, as per an agreement signed in May.