MAPUTO Nov 21 (Reuters) - South Africa's Grindrod will expand annual throughput capacity at its Matola coal terminal in Mozambique to 7.3 million tonnes by March next year, then start a larger upgrade to 20 million tonnes, an official said.
The Matola terminal, outside Mozambique's capital Maputo, is an increasingly important route for South African companies that have been struggling to ship all their coal for export due to congestion on railways leading to terminals in South Africa.
The Matola terminal can process 6 million tonnes of product now, some of which is used to move magnetite - an iron ore used in a variety of industrial and other applications.
Sean Rowan, commercial executive for Grindrod Terminals, said the 20 million tonnes terminal will be a new unit.
Once this is built, in two phases due in 2016 and 2018, the current facility will be converted into either a magnetite or iron ore terminal.
A final investment decision for the expansion to 20 million tonnes will be taken by March next year, he said.
"We are engaging with a lot of coal producers to secure commercial agreements which need to be put in place by early next year," Rowan told a Coaltrans conference in Maputo on Wednesday.
While it has so far been mainly South African producers sending coal through Matola, Grindrod plans to open it to other countries as well and has run a trial moving coal from landlocked Botswana.
"We are heavily dependent on South African exporters but the plan for this expansion is to provide an export route and export capacity to all neighbouring countries of Maputo," he said.
Rowan said Grindrod was in talks with South African freight logistics group Transnet and its Mozambican counterpart CFM to match the expanded terminal's capacity on their railway lines.
"Those discussions are progressing extremely well," he said.
Shipping company Grindrod is also in talks with Transnet to reduce the rates on the line leading to Matola, which are double those Transnet charges on its main coal line to the Richards Bay Coal Terminal in South Africa.
"We are trying to get the rates reduced but nothing has been concluded as yet. Hopefully soon that will be happen," Rowan said. (Reporting by Agnieszka Flak and William Mapote; Editing by Anthony Barker)