Areva, the French nuclear energy giant, inked an agreement with Mon-Atom, a state-owned company in Mongolia, to develop to uranium mines in the Gobi desert.

Areva said on Saturday that it under the agreement, it would create a company 66 per cent owned by it and 34 per cent by Mon-Atom. Mitsubishi Corporation of Japan will have an equity interest.

The deal was signed during a visit to Mongolia by French Foreign Minister Laurent Fabius. The agreement, said Mongolian Foreign Minister Luvsanvandan Bold, is a vital step for the country which is rich in resources but continue to remain poor.

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Areva disclosed that initial exploration work led to the discovery of two uranium deposits with estimated reserves of 60,000 tonnes.

Mongolian protesters, however, warned the mines could cause contamination of water resources in the region. Setenge Lkhagvajav, one of the leaders of the protest, said they are not against cooperation with France, but are pushing for a no uranium exploration in Mongolia to prevent radioactive pollution and contamination.

Areva is the world's second-largest uranium producer and sources most of its uranium from mines in Kazakhstan, Niger and Canada. But its 10-year contract with Niger is expiring by the end of 2014.

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