ASMARA, Oct 3, 2007 (AFP) - Eritrea has granted Chinese firms licences to explore for gold and other minerals, the government said Wednesday as the country boosts economic ties with Beijing.

Asmara authorised Beijing Donia Resources Co. and the Eritrea-China Exploration and Mining Share Co. to begin potentially lucrative exploration work as part of efforts to cement ties with a China which is searching the world for resources to power its booming economy.

'The ministry (of energy and mines) is pleased to announce that it has recently issued two exploration licenses for iron and base metals, and gold and base metals,' said the statement carried in the state-run Eritrea Profile newspaper Wednesday.

'The ministry looks forward to continuing its review of new applications for exploration licenses throughout Eritrea,' it said.

'In recent years notable exploration successes have been made with world-class gold, copper and zinc discoveries.'

A mining application by Canada's Nevsun Resources Co. for the Bisha mine in western Eritrea is also under 'active review,' it added.

Asmara has turned increasingly towards China, a key trade partner which earlier this year cancelled part Eritrea's debt.