China will complete by 2015 a $2 billion rail extension from Tibetan capital Lhasa to a monastery town that is the seat of the Panchen Lama, the second-most senior figure in Tibetan Buddhism.
The 13.3 billion yuan ($2.02 billion) spur follows the 2006 completion of a rail link to Lhasa, which critics said would speed the Sinofication of the Tibetan plateau and enable a sharp increase in mining and other industry in the environmentally fragile region.
Many Tibetans chafe under Chinese rule and believe that a sharp influx in central Chinese investment primarily benefits Han Chinese migrants. Tensions bubbled over into torrid violence in 2008 across Tibetan parts of China.
The new, 253-km (157-mile) line to Shigatse, construction of which began last September, will be able to carry 8.3 million tonnes of freight a year, official news agency Xinhua said. It did not provide comparable passenger numbers.
"The new rail link, plus a new airport that opened in November, will play a vital role in boosting tourism and accelerating the transport of natural resources," the report said.
By opening up transport of ore to the industrial regions of China, the rail line has accelerated a number of mining projects; including the massive Yulong copper mine, under development by Western Mining and Zijin Mining Group Co Ltd.
It is the first extension of the controversial railway. Another is expected to be built within the next five years to Nyingchi, in eastern Tibet, Xinhua added.
The new line could boost migration to Shigatse, traditionally the seat of the Panchen Lama, who is second in importance to the Dalai Lama in Tibetan Buddhism. Many of Shigatse's historic structures were left in ruins after the Cultural Revolution.
China has long eyed a rail network in restive Tibet, and these schemes are unlikely to be affected by the recent fall of the country's rail minister, who is being investigated for "serious disciplinary violations".