MOATIZE, Mozambique, Oct 7, 2008 (AFP) - Workers drip with sweat under the tropical sun as they rebuild a rail line in central Mozambique that could transform a region devastated by civil war, but rich in untapped coal reserves.

This region in Tete province was once an industrial hub in the former Portuguese colony, but decades of war left the railway littered with landmines, severing the only link with the outside world.

Now that's slowly changing as foreign investors move in to tap what is believed to be the world's largest reserves of high-quality coal, estimated at 2.4 billion tonnes.

'There is lots of coal here in Tete and it will meet the international steel industry's demand for coking coal,' said Syd Parkhouse, the local manager for Australian mining giant Riversdale.

During the war that broke out at independence in 1975, Tete was a prime target for rebel attacks because of a strategic bridge across the Zambezi River at the town of Moatize and its rail links to the Indian Ocean ports of Beira and Nacala.

But now investment is pouring in. Riversdale and its Indian partner Tata are launching projects including a coal-processing facility and an electrical plant worth 830 million dollars.

Parkhouse said the power station, fired by locally mined coal, would supply power across southern Africa, where many countries are facing severe energy shortages.

Brazilian mining firm Companhia do Vale Rio Doce has won a 25-year concession and plans to invest about two billion dollars to revive old mines and to open new shafts.

The national director for mining, Fatima Momade, has predicted that the 665-kilometre (400-mile) railway to Beira will reopen in 2010, clearing the way for Mozambique to become a coal exporter.

Mozambique has awarded 125 mining licenses, mainly in Tete but also in the Niassa basin in the country's far north.

Corporate money is already being used to build new roads, schools and hospitals, in a region where many people live on less than one dollar a day.

'This is important for us to ensure we recognise the needs and the livelihood of the communities in which we live and operate. The local community at Tete has been engaged from day one,' said Parkhouse.

Residents here say they hope that the coal mines will bring back some stability to their lives.

Inacio Antonio, 55, said he used to work as an office assistant for the railway and ports company Caminho de Ferro de Mocambique, but lost his job in 1983 when the Sena railway lines were closed in the middle of the war.

'I used to earn enough to take care of my family and also enjoyed company benefits like taking a free ride on the passenger train to Beira on weekends,' Antonio said as he puffed on a cigarette rolled from pages of a newspaper.

Like the rest of his community, Antonio is hoping for a new life from the railway, an end to their isolation and freedom from the terror of hidden explosives.