ANTANANARIVO (AFP) - Two people have died in violence at a Chinese-owned sugar refinery at a village in western Madagascar, the country's prime minister said Thursday.

"There are two dead and a part of the refinery has been destroyed," said Roger Kolo. The unrest appears to have been sparked by a labour dispute.

The unrest appears to have been sparked by a dispute over contracts for seasonal workers and wages for full-time staff. Police intelligence director Anthony Rakotoarisoa said there had been tensions at the Sucoma plant between Malagasy staff and the Chinese owners. Previous clashes have led to "acts of vandalism and physical attacks on the Chinese."

In November two Chinese were injured and property damaged.

The identity of the two killed in the latest clash, and how they died, was unclear, but local radio reported that Chinese staff had already been evacuated.

Tensions at the plant appear to have increased when two senior labour figures were arrested during a police crackdown Wednesday.

Workers, armed with knives and at least one shotgun, responded by trying to free their leaders. The security forces said they retreated and fired shots into the air.

China's vast investment in countries across Africa has led to social unease in some countries, with the visitors sometimes accused of exploiting workers.