Mozambique raises coal railway, port project costs to $5 billion

MAPUTO (Reuters) - Mozambique has increased the estimated cost of a railway and port project to boost coal exports to $5 billion, almost twice as much as its initial projection, a Ministry of Transport official said. Mozambique picked Bangkok-based Italian-Thai Development Pcl to construct the 525 km (325 mile) rail line from Tete province to Macuse in Mozambique's Zambezia province and a port able to handle 25 million tonnes of cargo per year. The project was initially pegged at $3 billion but the figure has been revised. "The total value of both contracts is estimated at $5 billion, with the construction planned for 2016," Ministry of Transport spokesman Verlopes Nhampossa said. He did not give a reason for the revision but said technical teams were working on how much money would be spent on the railway line and the port separately. Mozambique, a former Portuguese colony that emerged from civil war two decades ago, boasts some of the world's largest untapped coal reserves and is expected to become a key source of premium, hard coking coal used in steel making. However, infrastructure bottlenecks have become a major headache for mining companies in the coal-rich Tete province, with some projects delayed or put on hold due to the problems of getting coal to port.