A Chinese company's planned $2 billion, 344-hectare paper mill in the US state of Virginia took a significant step forward when a major engineering and development contract was signed on Wednesday.

The contract, signed with Jacobs Engineering Group Inc, is for developing the overall site. It will include work on the design of the new plant's pulping facilities and units for tissue-making and fertilizer production using the proprietary technology of Vastly, also known as Tranlin Inc, which is the US subsidiary of Shandong Tranlin Paper Co Ltd.

"It's a complex project and, as Jacobs lays out the design for the site, a major part of the work will involve all the environmental permits that will be required," said John Stacey, senior vice-president of marketing and product development at Vastly.

In 2014, Tranlin said it would invest $2 billion over five years to build its first US manufacturing operation in Chesterfield County, which is about 32 kilometers from Richmond, the state capital of Virginia.

The plant is expected to generate 2,000 new jobs by 2020. It is the biggest Chinese investment and job-creation project in Virginia. The company broke ground on the plant's site along the James River in 2015.

"We are within the schedule to begin full operations by 2020," said Stacey.

The plant is expected to begin limited production of bathroom tissues, paper towels and napkins in 2018 by importing rolls of paper from China.

"In 2020 everything including the paper rolls will be made in the United States with American materials," Stacey said.

Stacey said Tranlin had decided to use the Vastly name to represent the brand.

"Given the massive scale and many facets of the manufacturing operations, multiple product lines and our site restoration efforts, we wanted a big name with virtually endless possibilities."

"This is an exciting opportunity for our global consumer products business. We have a long history of assisting our clients in growth and expansion in global manufacturing," said Bob Pragada, president of Jacobs Industrial Line of Business.