LONDON [MENL] -- Algeria has been quietly examining the feasibility of establishing a network of nuclear power facilities.

Western industry sources said Algeria has sought to exploit its natural uranium deposits to preserve declining energy reserves. The sources said Algeria has been developing a major nuclear program that has military applications. So far, the country has been operating two civilian nuclear reactors.

"Algeria has the funding and will to establish a nuclear industry that will be formally civilian but contain all of the capabilities required for a weapons project," an industry source said. "It could be a major player in the nuclear market."

Algeria first discovered uranium deposits in the early 1970s. But the North African country failed to develop a uranium mining industry because of high production costs.