Tata steel and Australia’s Riversdale Mining Ltd. will invest $270 million to develop a coal mine in Mozambique.

Riversdale said the first stage of the Benga project would produce about 1.7 million metric tons of coking coal used in steelmaking, and 300,000 tons of thermal coal for export.

Construction will start by the end of this year, the Sydney based mining firm said in a statement to the Australian stock exchange. 

A second stage expansion to boost production to 3.3 million tons of coking coal, and 2 million tons of thermal coal used by power stations is planned by 2014.

Tata Steel, India’s biggest producer of metal owns 15% of Riversdale, and also a substantial investment in Africa's mining and metals industry.