UPDATE 1-Mozambique coal export railway remains shut after rains

Tue Feb 19, 2013 7:43am EST

Related Topics

* Sena line only coal export route for Vale, Rio Tinto

* Vale declared force majeure on coal shipments

* Not possible to reopen this week - CFM

MAPUTO, Feb 19 (Reuters) - A railway line that is Mozambique's only available coal export route for mining giants Vale and Rio Tinto will remain shut at least until next week after heavy rains.

The line has been shut since Feb. 12 after heavy flooding along its tracks, forcing Vale to declare force majeure on a number of coal shipment contracts.

"It is not possible," said Alves Cumbe, spokesman for state-owned ports and railways group CFM, when asked whether the railway line would open this week.

"There are still intense rains and the river continues to flood. We cannot intervene at the moment."

Rio Tinto said it was monitoring the situation.

The shutdown is a further blow to companies already battling with major infrastructure bottlenecks in the former Portuguese colony, home to vast reserves of coking coal used in steel making.

The Sena line, which connects the northern Tete province with the coast, is currently the only available railway that mining companies can use to get their product to port.

Apart from the line, some companies are moving coal by trucks, although this method has not proven economically viable.

Vale expects to lose 250,000 tonnes of coal shipments due to the shutdown, but said the situation should be normalized by the end of the month.

The Brazilian mining giant was already forced to curtail its Mozambican output and export targets last year. Rio Tinto wrote down $3 billion on its Mozambican assets, partially due to infrastructure constraints.

Apart from an upgrade to the Sena line, Mozambique plans four new rail and port projects that together could raise the annual coal export capacity from Tete to more than 120 million tonnes, but these projects will likely take more than a decade to complete.

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