A Chinese consortium headed by the China National Machinery and Equipment Import and Export Corporation (CEMEC) has been granted the rights by the west African country's government.

The statement said the Gabonese state would have a share in the project but gave no further details.

An informed source said work would be launched at the end of the year and the first ore would be extracted before 2010.

The decision kicks out the world's leading iron miner, Brazil's Vale do Rio Doce (CVRD), which since April last year had headed a consortium with China's CEMEC and Sinosteel, along with the French group Eramet.

But the Brazilians and the Chinese "fell out over who would be in charge of the various operations," an observer told AFP, "and in the end they decided to make separate bids."

The duel split the Gabonese government between those who backed the Brazilian bid, led by Richard Onouviet, minister for oil and resources, and supporters of the Chinese, led by Foreign Minister Jean Ping, whose father is Chinese.

The iron ore was discovered in 1955 at Belinga, which lies in remote forest hills 500 kilometres (300 miles) east of Libreville, the capital and port on Gabon's Atlantic coast.

Belinga is thought to be one of the last major untapped iron ore reserves on the planet, estimated at at least a billion tonnes, 60 percent rich in iron. The site has never been developed because of the prohibitive cost of the necessary infrastructure.

Getting to the ore means that a new railway will have to be built to connect the site with Santa Clara, north of Libreville, where a deepwater port is to be built.

A new hydro-electric dam will also be required to provide the necessary power.

The total cost of the project is estimated at 300 billion CFA francs (450 million euros, 590 million dollars).

In the end, there was "no contest" between the Brazilian and the Chinese bids, one influential minister told AFP.

"The Chinese state offered to guarantee the project financially and promised to buy the entirety of Belinga's production," he explained.

"Moreover, the CMEC project includes the construction of a whole new railway between Belinga and the coast, while the Brazilians had only proposed a 200-kilometre branch line off the existing Transgabonese railway."

On the other hand, the Chinese tend to prefer to ship in their own workers rather than employing the local labour force, and CMEC's offer does not include many jobs for Gabonese people.

The country's president, Omar Bongo Ondimba, had promised that Belinga would create thousands of jobs. "The Chinese need to make an effort in this area," one Gabonese commentator said.

China is looking increasingly to Africa as a source of mineral resources to help power its rapidly growing economy.

President Hu Jintao visited Gabon in February last year, when he signed a series of bilateral trade accords with Bongo Ondimba.

After the visit, China's state-run oil company Sinopec signed a technical evaluation deal with the Gabonese oil ministry for three onshore oilfields.

Chinese cooperation with the African nation already includes two timber processing companies, an industrial fisheries firm and a Sino-Gabonese hospital.

CVRD, meanwhile, maintains a strong presence in Gabon despite losing out over Belinga.

It is already active in manganese mining in the country, and the government has promised to support its bids for copper and other mineral exploitations.

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