Japan gets the green light to mine coal in Mozambique

Japan's main steelmaker, Nippon Steel & Sumitomo Metal Corp, announced Thursday it got the necessary permits to start developing Mozambique's Revuboe coking coal mine, a week after Anglo American (LON:AAL) decided not to buy a majority stake in the project.

Nippon Steel, which along with Nippon Steel Trading owns a third of the project, aims to start production from the mine located in Mozambique’s promising Moatize coal basin in 2016, said the company in a press release Thursday.

According to the Tokyo-based firm, the Revuboe project holds identified deposits of high-quality coking coal on a scale large enough to allow open-cut extraction.

The mine, scheduled to start operating in 2016, is expected to produce 5 million tonnes of coking coal a year, a goal that Nippon Steel projects to reach by 2019.

Despite holding some of the largest untapped deposits of coking coal in the world, Mozambique’s mining industry has faced a number of challenges in recent months.

Only last week Anglo American abandoned a $555 million plan to buy a stake in the project to be developed now by the Japanese steel giant..

Weather conditions forced the Sena railway, which links the mines in Tete province and the Port of Beira, to close in February, disrupting coal shipments.

Earlier this year Rio Tinto (LON, ASX:RIO) took a $3-billion writedown on its investments in the country as concerns over logistics grow.

Other miners that currently operate in the southern African country, such as Vale (NYSE:VALE), have said the main challenges are related to logistics of exporting coal from Mozambique, as it lacks the infrastructure needed.