UPDATE 1-Asciano: in talks with Queensland mining interests

(Adds detail, shares)

SYDNEY, Sept 10 (Reuters) - The rail freight arm of Australian infrastructure company Asciano Ltd (AIO.AX) said it was in talks with mining interests operating in Queensland state, potentially challenging the state's rail monopoly.

Asciano, spun off from Toll Holdings Ltd (TOL.AX) earlier this year, issued a statement to the Australian Stock Exchange on Monday following media reports that it would agree deals with Rio Tinto Ltd (RIO.AX) and Xstrata (XTA.L) to carry coal from their mines to the ports of Dalrymple Bay and Gladstone.

The Australian newspaper said Asciano's Pacific National rail freight network was targeting the monopoly of state-owned Queensland Rail on the A$18 billion ($14.9 billion) Queensland coal export market.

The newspaper said Asciano had put in orders for locomotives and coal wagons for Queensland's narrow-gauge tracks. One third of Queensland Rail's customers had contracts up for renewal in the next three years, it added.

"Asciano confirms that its rail freight business, Pacific National, is involved in confidential commercial discussions with mining interests operating in Queensland," Asciano said. "However no binding agreements have been signed."

According to Asciano's Web site, Pacific National is the second-largest coal haulage operator in Australia transporting around 92 million tonnes of coal every year by rail to domestic and export markets.

Shares in Asciano (AIO.AX), which also operates Patrick ports, were down 1 percent by 0014 GMT, outperforming a 1.6 percent fall in the wider market .AXJO. The company has recently been building a stake in Australia's Brambles Ltd. (BXB.AX), the world's biggest pallet supplier. ($1=A$1.21)