Oct. 17 (Bloomberg) -- China has asked whether its companies could invest in uranium mining in Australia, which has the world's largest reserves of the nuclear fuel, Foreign Minister Alexander Downer said.

Any investment would need to comply with Australian nuclear safeguards and rules on foreign investment, Downer said. State governments would also need to relax restrictions to allow new mines, he said.

``There is no reason why Chinese companies can't invest in the Australian resources industry, but that would all be subject to the Foreign Investment Review Board,'' Downer said in an interview on Australian Broadcasting Corp. radio.

Australia, the world's second-biggest uranium exporter, and China began talks in August for an agreement to allow uranium exports. The accord will set up safeguards to ensure Australian uranium supplied to China is used only for peaceful purposes.

Australia, with 41 percent of global uranium reserves, meets only 21 percent of demand, according to government figures, partly due to mining bans. An agreement with China may enable miners such as BHP Billiton and Rio Tinto Group to export the ore to China, Asia's biggest energy user.

China had asked at a Beijing meeting of officials in February if it could conduct uranium exploration and mining in Australia, the Sydney Morning Herald reported today, citing government documents.

Australian Prime Minister John Howard said he wasn't aware of the approach by China.

``If China or indeed anybody else wants to mine uranium in Australia, there'll be subject to the same laws as anybody else,'' Howard said in an interview on Nine Network television. ``We will deal with all comers in accordance with our rules.''

China plans to build 27 power plants to meet rising demand for energy, according to the World Nuclear Association.

Australia has 19 nuclear agreements covering 36 countries and its uranium exports account for 2 percent of total world electricity production.

To contact the reporter on this story: Fergus Maguire in Canberra, Australia at fmaguire@bloomberg.net

Last Updated: October 16, 2005 22:00 EDT