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The Indiana Rail Road Co. (INRD) recently signed an agreement with Peabody Energy to construct a 5.2-mile industrial spur to serve Peabody’s new Bear Run Mine in Sullivan County, Ind. — the largest surface coal mine in the eastern United States, according to the 500-mile regional.

Construction is expected to start after the Surface Transportation Board (STB) issues a declaratory order on the project. INRD submitted filings to the STB in October 2008 and the railroad’s officials expect to complete the new line by early 2010.

Peabody plans to spend between $350 million and $400 million to develop the mine, which is expected to produce up to 8 million tons annually after 2010.

INRD will spend about $17 million to build the spur, and an additional $5 million during the next two years to improve infrastructure to accommodate increased traffic volumes generated by the mine.

“Peabody’s investment is one of the most significant industrial developments in Indiana in this decade, and the largest single new business opportunity ever awarded to The Indiana Rail Road,” said INRD President and Chief Executive Officer Tom Hoback in a prepared statement. “We project that it will increase our current coal transportation volumes by more than 30 percent.”