China's Export-Import Bank (Eximbank) will invest $2.3 billion in the construction of a new hydroelectric power plant in Mozambique, crucial to the southern African country's plans to exploit its mineral resources, officials said on Wednesday.

"The Mepanda Nkua dam and hydroelectric plant, on the Zambezi river, will be built at a cost of $2.3 billion. The government has signed a memorandum of understanding with Eximbank on the financing arrangements," an official in Energy Minister Salvador Namburete's office told Reuters.

"A decision on the commencement of the project is dependent on agreeing all terms after a technical audit by the bank, and talks with potential consumers of the electricity such as mining companies and South Africa's power utility Eskom," the official said by telephone from the Mozambique capital Maputo.

Mepanda Nkua power plant is expected to produce 1,300 MW and would come on stream in 2010 or 2011, according to Energy Ministry estimates. The facility is 70 km south of Mozambique's main Cahorra Bassa power plant, in which Portugal is preparing to hand over its 85 percent stake to the Mozambique government.

Mozambique was pressing for a late 2006 project start, the official said.

He said the memorandum of understanding with Eximbank also provided for the bank to fund the construction of the $300 million Moamba-Major dam in Maputo province, which will provide clean drinking water for residents.

Specific funding details, such as interest rate and period for repayment, were yet to be worked out, the official said.