Brazilian mining giant, Vale, opened a new $1.7 billion coal mine in Mozambique on Sunday tapping into the country’s 23 billion tons coal reserves, AFP reported.
According to AFP, Mozambican President, Armando Guebuza and outgoing Vale Chief, Roger Agnelli attended the opening ceremony in northwest Mozambique to mark the largest investment in the country.
In 2004, Vale became the first international mining giant to be granted a concession in Mozambique and had at its peak 7500 workers mostly Mozambicans.
"Vale celebrates today the beginning of mining activities at its coal mining projects in Moatize, in the Tete province of Mozambique, ahead of operations at the processing plant," AP quoted a statement from the company.
The mining giant aims to start production in July and export one million tones of coal from the project this year and this is expected to boost Mozambique’s current economy growth of 6.5 percent.
Historically, the Mozambican civil war from 1977 to 1992 crippled the country’s economy and devastated its infrastructure.
Over 20 years later, Mozambique has managed to attract foreign investors to its mineral wealth but there are concerns about getting the product to market due to the county’s poor infrastructure.
Transport issues however still loom large over the country's plans for an export boom France24 reported.
A 600km Sena railway line that connects coal rich Moatize district to the Indian Ocean still remains unfinished.
When complete, Sena line will only be able to handle six million tons of coal a year such that four million allocated to Vale and two million to Riversdale.
Authorities however have reassured that mining giants will still be able to get their product to market.
"There are some problems, but it is still working,” Mozambique Central Railway Services head Candido Jone told AFP.
According to Star Africa, Australian mining company Riversdale, in a partnership with India's Tata steel, will also start operations later this year at a nearby coal mine.
The partnership hopes to produce six million tonnes a year by 2016.
Mozambique further signed a third large coal contract with Jindal Steel and power from India in February and is expected to produce 11 million tones a year when it opens in 2012.
Star Africa further revealed that Vale is investing in another railway line from Tete to the northern port of Nacala.
Nacala is the country's only deep-water port.
The arrival of Vale in Mozambique has also seen the financing of the construction of Africa's first HIV drug factory and a study to map the country's potential as a biofuels producer.