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BLANTYRE, Oct 2 AFP

October 03 2009, 05:09AM

Australia firm Paladin has dismissed allegations of contamination from a northern Malawi uranium mine, telling MPs that two rights groups have been paid funds to discredit its operations.

Malawi's parliamentary health committee summoned the firm after a non government organisation alleged that workers and villagers around the mine could be drinking uranium-contaminated water from a river nearby.

"They are being paid and used as puppets to advance ideologies of western corporations that are against nuclear energy as an alternative source of power," Neville Huxham, Paladin's Malawi country manager, was quoted as saying by Malawi media on Friday.

Paladin inaugurated a $US220 million ($A253 million) uranium mine project in Karonga district in April.

The Catholic Commission for Peace and Justice (CCJP) has warned that "with mining at full throttle, the possibility is that uranium would easily flow into Lake Malawi", Africa's third largest lake, in a report on the mine.

Huxham singled out the CCJ and the Citizens for Justice as two groups against the uranium mining.

"We know that there is funding coming from overseas to fund these NGOs. These attacks on Paladin are attacks on the integrity of the government which gave us the go-ahead to do the mining."

He said there's no danger from the mining, telling the commission the uranium at Karonga is of "low grade with a low dosage of radioactive elements".

A committee official told AFP that Huxham did not name the firm involved, but quoted him as saying Paladin had information showing that one of the rights groups had been paid $US350,000 ($A402,507) dollars "to attack Paladin."

Paladin owns an 85 per cent stake in the mine. The Malawi government owns the rest. The mine will generate over $US150 million ($A172.5 million) in export earnings per year, Paladin says.

Malawi, whose economy is agriculture-dependent, also has bauxite, emeralds and traces of diamonds.