Jindal to export first Mozambique coal in March despite rail woes

By Agnieszka Flak and Marina Lopes

TETE, Mozambique, Feb 13 (Reuters) - India's Jindal Power & Steel expects to move the first coal from its Mozambican mine to port next month but how much those exports rise depends on fixing an underdeveloped rail and port network, its country head for Mozambique said on Wednesday.

Jindal will move its first shipment by road, which is more expensive than transport by rail, Manoj Gupta said.

"We are finishing the commissioning and the first exports will be in March," he told Reuters.

Jindal plans to produce and ship about 1 million tonnes of coking and thermal coal this year from the mine, ramping up to 10 million tonnes a year over five years.

Infrastructure constraints are a constant headache for mining companies setting up in the former Portuguese colony.

Brazil's Vale was forced to curtail its output and export targets last year and Rio Tinto wrote down $3 billion on its Mozambican assets, partially due to infrastructure problems.

Logistics group CFM from about April will allocate Jindal some capacity on the Sena line, which links Tete province with the port at Beira and is the only operating export railway route from the coal mines.

But upgrades on the line have had a number of delays. This week it was shut due to heavy rains.

"This will definitely slow down production and shipments and that will definitely affect the business," Gupta said.

Apart from a planned expansion to the Sena line, Mozambique has plans for four new rail and port projects that together could raise total annual coal export capacity from companies' mines in Tete to more than 120 million tonnes, but it is likely to take more than a decade to materialise.

"Money is not the problem, but we need more direction as to what needs to be developed and how. Otherwise every miner will start doing its own thing," Gupta said. (Editing by Louise Ireland and Jon Herskovitz)