By JOHN MBALAMWEZI Posted Sunday, June 26 2011 at 09:30 Tanzania plans to construct a Tsh2.3 trillion ($1.5 billion) railway line to open up its mineral rich southern region and boost the country's coal and iron revenues. Related Stories The 850-kilometres long railway line whose construction is set to begin next year, will link coal and iron ore projects in Mchuchuma and Liganga respectively to the Mtwara Port. Athumani Mfutakamba, Deputy Minister for Transport, told The EastAfrican in Dodoma last week that negotiations between the National Development Corporation and Sichuan Hongda Corporation of China over the necessary infrastructure were at an advanced stage. The Mchuchuma iron ore and Liganga coal reserves in the southern highlands have the potential to create an estimated 40,000 jobs, spur iron and steel industries in the country and boost coal exports. The project will be the second largest single operation since the 1970s when China built the $500 million 1860-kilometre long Tanzania-Zambia railway line from Dar es Salaam to Kapiri Mposhi. Deputy Minister for Trade, Industries and Marketing Lazaro Nyalandu, said investors in the Liganga and Mchuchuma iron ore project had set aside Tsh10 trillion ($6.25 billion) for project implementation. Mr Nyalandu said the project is expected to contribute between 20 and 25 per cent of the country's GDP. Coal deposits at Mchuchuma which is near the border with Malawi and Mozambique are estimated at 125.3 million tonnes, while iron ore deposits in the Liganga area are estimated to be 45 million tonnes. These are to be exploited jointly to stimulate an iron and steel industry in a country that depends largely on the agricultural sector. Minister for Transport Omari Nundu, said the railway line will boost trade with neighbouring Mozambique, Malawi and Zambia. "The railway line will also attract passenger traffic because of the huge potential in mineral and agricultural activities in the region," he said. Minister for Finance Mustafa Mkulo, said the government plans to spend $34 million in the 2011/2012 financial year on conducting feasibility studies and detailed design of the Mtwara–Songea –Liganga railway line.