Mitsui to help develop mine, rail system, port all at once
TOKYO -- Mitsui & Co. will make a major investment in Mozambique involving a coal mine, railway and port facilities, hoping to aid the country's infrastructure development.
The Japanese trading house will target a mine in Moatize, to the northwest. It will also participate in a redevelopment project for the Port of Nacala, in the northeast, as well as a railway to connect the two.
Initial investment will come to about 150 billion yen ($1.24 billion), including the 70 billion yen to 90 billion yen to buy stakes in the projects. The rest of the money will go into such expansion projects as increasing coal output.
Brazilian resource giant Vale, which currently holds stakes of more than 90% in the projects, will unload some shares to allow Mitsui to own 15-25%. The investment will be financed with cash reserves and borrowing from the Japan Bank for International Cooperation.
Coal from the Moatize mine is high in quality and suitable for iron-making. The mine's reserves are estimated to be at the same level as a major Australian site.
The plan is to ramp up coal output from between 3 million and 4 million tons a year to 20 million tons in 2017 or 2018, shipping output to Europe, Japan, and elsewhere in Asia.
The Port of Nacala is seen playing a key role in Mozambique's trade with Japan, China, Southeast Asia, India and Europe. It is being redeveloped under a public-private joint initiative so that larger vessels can use the facilities.
The railway connecting the mine and the port will slash costs at the coal operations. The trains could also transport food, since they will pass through land where soybean farms are being developed.
Separately, Mitsui has a natural gas project underway with partners including U.S. oil company Anadarko Petroleum. The Japanese trader is eyeing power generation, petrochemical and food businesses as potential areas for using the resource.