(Adds project finance, analyst comment)
By Stephen Eisenhammer
Dec 9 (Reuters) - Brazil's Vale SA said on Tuesday it sold a stake in its Mozambique coal mine to Japanese trader Mitsui & Co Ltd for $763 million, as it looks to shore up its balance sheet during a period of lower commodities prices.
Reuters reported the deal last week, citing sources. Mitsui also confirmed the report on Tuesday.
Analysts responded favourably, saying that after a year of looking for a buyer Vale had managed to sell the stake for a decent price in a difficult market.
Vale, the world's largest producer of iron ore, has been hit by a halving in price of the steelmaking ingredient this year, putting it under pressure to raise cash to complete core projects under construction.
Under terms of the transaction, Mitsui will buy 15 percent of Vale's 95 percent stake in the Moatize coal mine for around $450 million, with the exact figure dependent on production targets for the project.
Vale said the proceeds will be used to fund the expansion of the mine, set to have a capacity of 22 million tonnes of coal ore per year and making it one of world's largest metallurgical coal mines. Mitsui will be responsible for its share of future mine investments.
The Brazilian miner also agreed to sell Mitsui half of its 70 percent stake in the Nacala corridor, a port and 900 kilometer rail connection to the mine, for an initial $313 million.
"The partial sale of the troubled Moatize mine and logistics project appears to be at a very attractive price for Vale... particularly in the current poor price environment for metallurgical coal," Tony Robson, analysts at Canadian broker BMO Capital Markets, wrote in a note to clients.
Coal prices have declined steadily for more than three years as demand has failed to keep pace with rising production.
Vale said it expected to ship first coal from the new port in the first quarter of 2015, with rail ramping up throughout the year and capacity being reached by 2016. The miner is also seeking $2.7 billion in financing for the project which it expects to seal in the first quarter.
The company declined to divulge production costs for Moatize, saying only it was confident it could eventually be among the lowest cash costs in the industry.
Shares in Vale traded down 2.4 percent in Sao Paulo. Mitsui shares closed down 1 percent. (Reporting by Stephen Eisenhammer; Additional reporting by Tokyo Newsroom; Editing by Jeffrey Benkoe and Chizu Nomiyama)