Vale, which has had problems ramping up production from its Carborough Downs mine in Queensland, will double output of Moatize to 22 million tonnes of coking and thermal coal, with first production from the expanded mine slated for the second half of 2014.
Vale is keen to diversify away from iron ore into coal and has dedicated $4.4 billion of the $6 billion to a new coal terminal at the port of Nacala and a 912km rail line connecting the coal mine with the port.
Vale coal unit general manager for marketing and sales Marcelo Matos reportedly told a coal conference in Maputo that "Moatize is a great alternative to [supply] the growing seaborne market, it's in a very strategic location and there is a lot of interest [for the coal]", according to Reuters.
Mozambique is considered a natural fit for Vale as Brazil and Mozambique share a Portuguese colonial heritage and both have pro-resources governments.
Mozambique is keen to attract foreign investment to help rebuild after years of civil war, without nationalising its mining sector, which only accounts for less than 5% of its gross domestic product.
It is bound to grow as its northwestern Tete province is believed to host one of the world's largest untapped coal reserves.
More than $3 billion has been injected into Mozambique over the last five years alone, according to a report by the IMF and in the last 12 months, Rio Tinto completed its acquisition of Mozambique-focused Riversdale Mining.
In an attempt to deal with the influx of new projects slated for Mozambique and their infrastructure needs, its government is planning to establish a working framework for how infrastructure projects are planned and who will benefit from them.
The Mozambican government also announced a port building program to improve the country’s infrastructure and facilitate the transport and export of coal to the nearby Indian and Chinese markets.
The government said it was planning to expand its Quelimane port in the centre of the country to be able to handle 20Mt per annum of coal.
Mozambican Coal Development Association chairman Casimiro Francisco reportedly told Reuters it could eventually be expanded further to handle 100Mt.
"By 2016, all the coal companies will be operating, including those whose projects are delayed and all capacity at the Beira port will be used up," he reportedly told Reuters on the sidelines of a Coaltrans conference.
“The country will need more solutions, so we are looking at the Quelimane port as an alternative.”
Casimiro reportedly said companies had expressed interest in funding a 500km rail line linking the mines with the port in exchange for an allocation.
Rio Tinto chief executive of energy Doug Ritchie believes Mozambique to be the greatest undeveloped seaborne coking coal region in the world and a “tier one” resource for the company.
It has a strategic objective of producing 25Mtpa coking coal from Mozambique by 2020.
He told a recent conference the company was on track to commission its 65%-owned Benga stage 1 project – which it acquired from Riversdale – by the end of the year.
As part of the Benga stage 1 project, Rio Tinto is planning for 1Mtpa coking coal to be railed and 0.5Mtpa thermal to be trucked to port in 2012.
It has a 2013 target of producing 5.3Mtpa run of mine coal, 1.5Mtpa hard coking coal product and 0.9Mtpa of thermal coal product.
Rio Tinto also owns the Zambeze project in Mozambique, with first production slated for 2015 and a target of up to 42Mtpa run of mine coal, 10Mtpa hard coking coal and 6Mtpa thermal coal by 2019.
Smaller Australian companies have also begun to take notice of the opportunities.
No stranger to African coal, Australia-based coal group Cokal is seeing its coal potential after it accelerated drilling at its Bumi Barito project in Mozambique.
Cokal has a three-year minimum arrangement to explore in Mozambique, which chief executive Peter Lynch told ILN could be the largest coal basin in the world.
