BEIJING - Peabody Energy Corp on Thursday that it has entered into a framework agreement with the Xinjiang Uygur autonomous region to develop a surface coal mine with annual production of 50 million tons.

As the world's largest private coal company, US-based Peabody said it will construct, manage and operate the mine and select a final location for the facility with the cooperation of the local government.

The company didn't give details about the total investment or construction schedule. However, it said the local government will accelerate the allocation of premier coal resources for the project, out of the total resources available, which indicates its confidence about the future development of the mine.

Experts said the project will help the economic development of the region, but the local government should also be mindful of environmental protection and avoid excessive energy exploitation.

"The project shows the confidence US energy companies' have" in the Chinese energy market, said Sun Hongbo, a researcher at the Chinese Academy of Social Sciences.

"China will keep increasing its demand for coal in the short term, so the company will have enough potential buyers after actual production begins.

"The project will also bring many employment opportunities for local people," he added.

Usually, foreign companies can only develop coal mines by investing in or cooperating with State-owned companies, said Dai Bing, senior analyst at the coal trading website coal.com.cn.

"It is not easy for foreign companies to develop a coal mine alone in China because of our regulations," he said.

Peabody's Chairman and Chief Executive Officer Gregory H. Boyce said: "Peabody is honored to work with the Government of Xinjiang to advance a world-class large-scale surface mine in the world's largest and fastest-growing coal market.

"We can unlock the full benefits of Xinjiang's vast energy resources to supply essential energy and benefit the region through job creation, economic development and social responsibility," he said.

Xinjiang has estimated coal reserves of 2.19 trillion tons, accounting for about 40 percent of China's total reserves.

However, some experts don't think Xinjiang should use its coal reserves to boost its economy.

"The region has abundant clean and renewable energy resources, which should get more attention in terms of economic development," said Jiang Kejun, an official at the Energy Research Institute of the National Development and Reform Commission.

He said local demand for coal was not large in Xinjiang and transportation costs of the fuel to other parts of China are high.

"Plus, the country's coal demand will peak in less than 10 years, which means the coal companies will have to make a great effort to find buyers by then," he said.