Venezuela and China will develop an observation satellite to be built in Asia and launched from South America in 2012, according to Venezuela's science and technology minister.

Ricardo Menendez said Thursday that the earth-observation satellite, to be built at a cost of $140 million, would be used to monitor troop movements and illegal mining as well as study climate change and the environment.

"We will have a satellite with the ability to monitor our territory 24 hours a day," he told reporters at the unveiling of the project.

"The Venezuelan state will monitor the development and impact of natural phenomena such as earthquakes, floods and heavy rainfall," he added.

The contract was signed by the Venezuelan ministry and the state-owned China Great Wall Industry Corporation.

The launch was set for October 2012, four years after the launch of the "Simon Bolivar," the first-ever Venezuelan satellite, named for the Latin American independence hero and also built with Chinese aid.

"As with the first satellite, the second will be made available to other countries in Latin America and the Caribbean," Menendez said.

The two countries have forged close economic ties in recent years as leftist Venezuelan President Hugo Chavez has sought to reduce dependence on Washington.

China has invested heavily in Venezuela's oil, gas and mining sectors in recent years and has sold Caracas 18 Chinese K-8 fighter jets.