JSC UzbekKo'mir and China Coal Technology & Engineering Group (CCTEG) recently signed a contract worth $88.5 million for the modernization of the coal mining system in the Surkhandarya region.

CCTEG will replace the existing production technology at the Baisun and Shargun coal deposits. It will also supply two mechanized complexes with 450,000 tons of coal per year, on a turnkey basis, according to UzReport.

CCTEG will begin supplying the equipment in the third quarter of 2014. The Chinese company won and signed a tender for the project in June.

Chinese Eximbank will provide $89.5 million in funding to the $101.3 million project. UzbekKo'mir will provide $11.8 million to the project.

The modernization project could help Uzbekistan to raise annual coal production to 900,000 tons by 2020, compared with 20,000 tons in 2013, according to industry experts.

ShargunKo'mir will operate the project. It holds the license to develop the Baisun and Shargun coal deposits, which have total proven reserves of 45.8 million tons of coal.

The state owns 51 percent of JSC ShargunKo'mir shares. UzbekKo'mir owns 41.57 percent and its employees own 7.43 percent, according to UzReport.