SYDNEY, June 24 (Reuters) – The Pacific island of Nauru is negotiating for the construction of an undersea communications cable that would connect to an Australian network, two sources with knowledge of the talks told Reuters, after the earlier rejection of a Chinese proposal.

The United States and its Pacific allies have concerns that cables laid by China could compromise regional security. Beijing has denied any intent to use commercial optic fibre cables, which have far greater data capacity than satellites, for spying.

Nauru, which has strong ties to U.S. ally Australia, helped scupper a World Bank-led cable tender earlier this year over concerns the contract would be awarded to the former Huawei Marine, now called HMN Tech, after the Chinese firm lodged a bid priced at more than 20% below rivals.

The tiny Pacific nation of just over 12,000 people has now approached the Asian Development Bank (ADB) to help fund an alternative, the development agency told Reuters.

“ADB is involved in very early discussions with the government of Nauru to explore possible options to help fund an undersea cable to deliver low-cost, high quality internet service,” the ADB said in a statement to Reuters.

“The details of the connection arrangement and funding sources will be determined in due course.”

The two sources said the new plan would involve laying a cable from Nauru to the Solomon Islands capital of Honiara, located about 1,250 kilometres (776.7 miles) apart.

The new line would then tap into the Coral Sea Cable system, a 4,700km network that connects Australia to the Solomons and Papua New Guinea. That line, majority funded by Australia and built by Sydney-headquartered Vocus Group (VOC.AX), was completed in 2019 to shut out a competing offer from Huawei Marine, then owned by Huawei Technologies.

The former Huawei Marine is now majority owned…