031110 A new study has found that SA coal reserves have been significantly downsized since 2003.photo by Simphiwe Mbokazi 453

London-listed Kazakh miner ENRC expects its logistics project in Mozambique, which will allow it to transport coal from Tete province to the coast at Nacala, to be completed by early 2016, a senior official said on Tuesday.

Infrastructure bottlenecks are the main headache for companies scrambling to get a piece of a coal rush in Mozambique, and various firms have proposed projects to either upgrade old and dilapidated rail lines or build new ones.

“We expect construction to start in the first-quarter of 2014. We expect our trains to start running in late 2015, early 2016,” Paul Craven, ENRC's general manager Africa Coal, told a Coaltrans conference in Maputo.

The rail line and an associated coal terminal at the northern coastal city of Nacala will have a baseload capacity of 40 million tonnes per year, but will be able to handle up to 60 million tonnes, if needed.

The project could be expanded to 100 million tonnes in the future, Craven added.

The ENRC-led project will be the second railway line linking the coal-rich Tete with the Nacala port. Brazil's mining giant Vale is investing $4.4 billion to upgrade the Nacala port and an existing railway passing through Malawi.

Craven could not give details on the cost of the ENRC project, but said it would be cost-competitive to Vale's 18-million-tonne logistics corridor.

Nacala's deep waters, which can handle Panamax vessels, are seen as the best location for coal exports from Mozambique, in contrast to Beira further south, which requires dredging to accommodate larger ships.

Craven said there would be open access to the line, with capacity allocated by an independent regulator.

Smaller companies setting up in Mozambique have long voiced concerns that they may not be able to get their coal out if access to infrastructure remains constrained or if it is controlled by mining giants such as Vale.

Government has sought to allay their fears, saying that access would be regulated on a fair and equitable basis.

Mozambique, a former Portuguese colony which emerged from civil war two decades ago, boasts some of the world's largest untapped coal reserves and is expected to become a key source of sought-after premium, hard coking coal, used in steel making.

ENRC plans for the start up of its mines to coincide with that of the rail line, with output from its Estima project to be ramped up to 20 million tonnes over a three to four-year period.

The company will apply for a mining licence for its less-advanced North Shore project early next year.

While it was too early to give production numbers for that project, Craven said he would be “very disappointed with less than 10 million tonnes per year.” - Reuters