China has granted Niger a $95 million preferential loan to boost a uranium mining project the two countries have in the West African state, Niger's government said late on Thursday.

Niger's government is a 33 percent joint venture partner with the China National Uranium Corporation (SINO-U) in the SOMINA uranium mining operation, due to come on line by 2010, with an annual output of about 700 tonnes.

The entry into Niger of Chinese miners and Cameco Corp (CCO.TO: Quote), the world's top uranium producer that now has a stake in GoviEx, a company with local exploration rights, follows years of dominance by French nuclear group Areva (CEPFi.PA: Quote).

China has agreed to the Export-Import Bank of China granting Niger a preferential loan of 650 million yuan ($95.22 million) with a view to supporting the SOMINA uranium exploration project, Niger's government said in a statement broadcast on state television late on Thursday.

Niger will have to pay 2 percent interest on the loan, which must be paid back within 15 years, a government source said.

China has committed to investing some $300 million in the project, which is at Azelik, in the northern Agadez region, where Areva has mining projects but the Niger government has also been battling a two-year uprising by Tuareg rebels.

Niger already has two significant uranium mines providing 7.5 percent of global output from Africa's highest-grade uranium ores, according to the World Nuclear Association website.

Earlier this year, Areva said it had won a licence to operate the Imouraren mine, which would more than double Niger's uranium output to make it the second largest producer in the world. ($1=6.826 Yuan) (Reporting by Abdoulaye Massalatchi; Writing by David Lewis; Editing by James Jukwey)

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