OREANDA-NEWS. May 11, 2011. Mozambican President Armando Guebuza and the chairperson of the Brazilian mining giant Vale, Roger Agnelli, on Sunday detonated the first charge of explosives initiating coal production at Vale's open cast mine in Moatize, in the western Mozambican province of Tete.

The two men together pressed a button installed in the giant tent where the official ceremony to launch coal production was held. The explosion sent an enormous black cloud of coal dust into the atmosphere, as the crowd burst into applause.

It has long been known that there are coal reserves in Moatize, but under Portuguese colonial rule, and in the initial post-independence period, they were barely scratched in small underground mines. One such mine, now run by the British company Beacon Hill, continues to produce - but at the very low level of 30,000 tonnes a year. Vale is talking of millions of tonnes a year.

The Vale licence was granted in 2004, and even then Vale officials were speaking of Moatize as one of the last great unexploited coal basins in the world. Construction of the mine began on 27 March 2009, when Guebuza and Agnelli laid the first stone.

Guebuza declared that the Sunday ceremony was the confirmation that a dream has now become a reality. "What was previously a dream is now a majestic undertaking in which natural resources are driving the development of Mozambican human resources", he said.

He regarded the start of coal production at the Vale mine as a further victory in the struggle waged by Mozambique against poverty.

Guebuza stressed Mozambique's high potential in natural resources such as coal, natural gas, gold, tantalite, titanium-bearing heavy sands, and phosphates, among others, which are a pole of attraction for national and foreign direct investment. To keep the investment flowing, he pledged that the government will continue to introduce reforms to improve the Mozambican business environment.

Guebuza called on Mozambicans to exploit all the potential of the country's coal reserves in order to generate, in a sustainable and structured manner, more employment, income and development in Moatize district, Tete province, and the country as a whole.

Agnelli announced that so far Vale has invested about two billion US dollars in Mozambique, and intends to invest a further four billion dollars in the next five years.

As for the export of coal, Agnelli expected it to begin within the next two months, despite the delays in rebuilding the Sena railway line, linking Moatize to the port of Beira.

Currently, Vale-Mozambique employs about 8,000 workers, more than 85 per cent of whom are Mozambican. "In the second phase of the project, which is already being developed, we shall reach 15,000 workers", said Agnelli.

He stressed that this relatively large number of waged workers would change the face of Tete, since it would create a large demand for other services, including public transport and supermarkets.

As for new investments in the coming years, Agnelli stressed the plan to build a new railway from Moatize to the northern Mozambican port of Nacala, across southern Malawi, and the improvements to the port so that it can eventually handle 22 million tonnes of coal a year.

But in the initial phase, the mine will have the nominal capacity to produce 11 million tonnes of coking and thermal coal a year, which will be taken down the 600 kilometres of the Sena line to the new coal terminal under construction at Beira.

Agnelli was confident that, even in the first phase, coal exports will reach between 2.5 and three billion dollars a year. As from next year Mozambique should have a positive balance of payments, with the value of the country's exports surpassing that of its imports.

Vale has also invested over 100 million dollars in projects of corporate social responsibility, including the rehabilitation of Tete Provincial Hospital, the building of schools and health centres, and the development of local agriculture.