SINGAPORE - Sembcorp Industries has inked a joint venture deal to work with a Chinese state-owned enterprise on a coal-fired power plant project in Chongqing, China, it said in a statement on Monday.

As part of the deal, it will buy a 49 per cent stake in an existing coal-fired power plant owned by Chongqing Songzao Coal and Power, a unit of Chongqing Energy Investment Group.

It will also team up with Chongqing Songzao to jointly develop a bigger plant next to the first one, which it said "will be one of the most efficient power plants in Chongqing".

The total value of the existing power plant plus the project development cost of the second will add up to roughly 6 billion yuan, or $1.2 billion, it said.

Mr Tang Kin Fei, group president and chief executive of Sembcorp, said in a statement that the firm was keen to "expand our energy business in China" and looked forward to "further collaboration on other energy projects".

Chongqing Energy Investment Group, owned by the Chongqing municipal government, is the largest energy production and supply group in Chongqing with businesses in coal and gas supply as well as power projects including renewable energy plants.

The two power plants in the joint venture are located at the mouth of the coal mines in Chongqing and and are the only mine-mouth coal-fired power plants in the city, Sembcorp said.

Sembcorp shares rose two cents to close at $5.20 on Monday.