The Moatize mine is currently billed as one of the largest, cost-competitive operating coal mines as it has a huge coal reserve amounting to 690 million metric tons of metallurgical and thermal grade coal, and its coal seams are shallow, which enables a large-scale open-cut operation. Vale began its production in August 2011, and now exports coal via Sena railway from the Port of Beira, which is about 600 km south of the mine. The annual production in 2013 was 3.8 million tons. Vale has now been expanding the annual production capacity of the mine up to 22 million tons, which is expected to be reached in 2016. The expected expansion cost is approximately $2.1 billion, part of which Vale has already paid, and Mitsui’s future payment for the expansion cost on a pro-rata basis is expected to be $190 million.
The anticipated mine expansion would produce more coal than Sena rail and port capacity. There is a plan to construct the new Nacala Corridor infrastructure, to ship coal from the Port of Nacala, 912 km east of the mine.
The Nacala project requires the upgrade of the 682-km existing rail line, which runs across Mozambique and Malawi, and the construction of the new 230-km rail line and new construction of a coal terminal in the Port of Nacala and development of general commodities terminals. By managing such infrastructure effectively, its railway transport annual capacity is planned to increase gradually up to 22 million mt, the port’s coal shipping capacity is designed for 18 million tons annually and general commodities shipping capacity is expansible to 4 million tons annually. The total construction cost is expected to be approximately $4.4 billion, and part of the cost is planned to be funded with project finance from public financial institutions overseas and Japanese banks.
