Global miner Vale's Moatize coal mine in Mozambique could produce up to 12.7 million tonnes of hard coking coal per year in the first phase of the project, a senior official said on Monday.

The company had previously forecast an annual production of 8.5 million tonnes of hard coking coal.

Vale's Financial General Manager Fabio Bechara said the mine would also target to produce 2.4 million tonnes of thermal coal for exports and an additional 2.5 million tonnes for a 600 MW power station the company plans to build close to the mine.

We are studying the possibility of building a 600 MW power station...but that will be only the first phase of the project as we are limited by the existing transmission line, he said.

But we have the capacity to produce 2-3 times as much than the 2.5 million and could expand the power station accordingly...but that would depend on the transmission.

Bechara said Vale had so far spent $300 million of the $1.3 billion estimated for the project.

He said Mozambique's state-owned rail authority Portos e Caminhos de Ferro de Mocambique (CFM) would finalise the bidding process for the construction of a new coal export terminal at Beira by the end of the year.

But the new port may not be ready when Vale wants to ship first coal from Moatize by 2011.

There is still a chance that they will match our schedule, but we may have to look for an alternative, he said, adding that Vale might look into refurbishing an old, existing terminal at Beira to be able to handle up to 6 million tonnes a year.

We would make some investments to accommodate both Vale and some other producers...that would be more than enough for our first two years of production, he said. Vale estimates the ramp up of the project would take four years, starting from the middle of 2011. (Reporting by Agnieszka Flak; editing by James Jukwey)

Mozambique