ANALYSIS-Mozambique's coal boom will happen, just not yet
* Poor infrastructure, low coal prices are key constraints
* High-quality coal, supportive policies attract miners
MAPUTO, Dec 13 (Reuters) - Depressed coal prices, tight capital markets, shoddy railways and ports have cooled Mozambique's coal bonanza and will delay export projects aimed at supplying booming demand in Asia.
The former Portuguese colony has been the new darling of the industry, with its north-central Tete province boasting some of the world's largest untapped reserves of thermal coal for power generation and coking coal for steel production.
Some 23 billion tonnes of coal are estimated to lie beneath the war-scarred state, which would be enough to meet global demand for three years, and stretching along Africa's southeast coast, Mozambique is in a prime position for shipments to hungry and growing markets in Asia.
Generous government incentives have attracted billions of dollars as mining giants, including Brazil's Vale and Anglo-Australian Rio Tinto have flocked in, set up mines and shipped their first cargoes abroad.
But while the government still projects annual exports of around 100 million tonnes by the turn of the decade, producers and financiers now doubt this will happen anytime soon.
"The boom will be delayed based on two things: rail infrastructure constraints and the volatility of the coal price," said James Maposa, Africa mining programme manager at consulting firm Frost & Sullivan.
More than 70 coal exploration licences have been issued so far, four were converted to mining concessions while others are queuing up for future blocs.
Energy companies are also flocking in to explore vast natural gas fields discovered off Mozambique's coast.
Analysts say it is all happening too fast for the country to cope with, as the government suddenly has to cater for huge investments and meet ambitious expectations for legislation, infrastructure and skills that will take years to develop in a country scarred by a 15-year civil war that only ended in 1992.
The mood at a recent coal conference in Maputo was more subdued than the buzz a year ago, with executives talking about production delays, export curtailments and the one hurdle that is affecting them all: logistics.
"It's all very well to have this wonderful resource, but that's no use if you cannot move it," said Paul Runge, managing director at consultancy Africa Project Access.
Infrastructure upgrades are ongoing and some new ports and rail lines will be built from scratch, but it may take a decade until they materialise on a scale to meet industry demands.
Brazil's mining giant Vale is investing $4.4 billion to revamp a railway line from Tete to the deep-water port at Nacala via Malawi, and another line to Nacala is proposed by Kazakh miner ENRC, but much more investment is needed.
Rosario Mualeia, chairman of state-owned rail and ports company CFM, has laid out plans for four new rail and port projects that together will raise the annual coal export capacity from Tete to more than 120 million tonnes.
He said all four corridors could be completed within five years at a total cost of $12 billion, roughly the same size as Mozambique's gross domestic product, but industry figures say double that may be needed and a timeline of 10 to 15 years is more realistic.
While Mozambique's economy is still growing at 7 percent annually, the financial woes in Europe and the United States have tightened lenders' belts.
"You have less value for minerals, less capital, which is compounded by the lack of decisions regarding the completion of the infrastructure to get the coal out," said Stephan Morais, deputy CEO at Mozambican investment bank BNI.
Coking coal prices have dropped 25 percent since June to around $150 a tonne, while thermal coal prices have fallen to their lowest in three years to around $90 a tonne.
The slump in prices has forced firms to review and delay export projects.
Ncondezi Coal, whose project will mainly yield thermal coal, plans to build a 300 MW power plant near the mine and has ditched plans for exports for now.
"The last thing we want to do is destroy value in the deposit by producing a product and not being able to get it to market," Ncondezi Chief Executive Nigel Walls said.
Even if the funding is secured, projects will likely materialise at a snail's pace.
The reconstruction of the war-damaged Sena railway line from Tete to the Beira port that will raise the capacity on the line to 6 million tonnes by the end of this year is a case in point.
The project has been delayed for more than a decade, and while CFM is now completing the upgrade of the line, the capacity falls well short of the estimated 20 million tonnes of coal needed to be moved in the short term, and only around 3-4 million tonnes will be leaving Tete this year.
Despite the delays, miners active in Mozambique say they remain committed to Tete, expecting that prices will recover and logistics will be built, albeit late.
Producers praise Mozambique's investor-friendly policies and contrast it to other African states that have moved to extract more taxes and royalties from miners or forced firms to yield majority stakes.
As CFM's Mualeia put it: "The coal is there, it will come, but people need to be much more patient."
(Additional reporting by Marina Lopes; and William Mapote in Maputo; editing by Ed Stoddard, Henning Gloystein and James Jukwey)