By Eric Onstad

KOLWEZI, Congo, Oct 24 (Reuters) - Amid rusted hulks of abandoned plants and huge mine craters, Congo's former top copper town Kolwezi is showing signs of a reawakening.

The town in the southeastern copperbelt went into virtual hibernation two decades ago after looting by former dictator Mobutu Sese Seko forced the closure of most of the region's copper mines, some of the world's biggest.

"Over the last couple of years the changes here have been enormous," said Martin Christie, an official with Canadian-listed Katanga Mining, one of many firms reviving the mining industry.

"A petrol station reopened a few months ago. There was no need for one before: there were no vehicles on the streets."

Foot traffic and cattle dominated the streets, where sprawling, faded colonial-style homes evoke an era when this was the hub of the copper industry and one of the country's richest cities.

Now, brightly uniformed women direct traffic at a roundabout while hundreds of former illegal miners have formal jobs at mines or on social projects.

International mining companies are scrambling to get a foothold now political stability is returning after a 1998-2003 civil war that left most of the country in ruins.

Major mining groups BHP Billiton and Anglo American have returned to mineral-rich Democratic Republic of Congo, which last year held its first free elections in 40 years.

INFORMAL MINERS

One mark of renewal is a farm 12 km (7.5 miles) outside Kolwezi where former illegal miners are cultivating crops instead of pilfering ore at dangerous abandoned mines.

"Life as a digger was difficult," said 33-year-old Tshegeka Nwegi, who supported his wife and four children for seven years by illegally mining at a massive open pit abandoned by state mining firm Gecamines.

He could earn around 20,000 francs ($35) a month, but the income was unstable and earlier this year authorities expelled the miners so the flooded mine could be rehabilitated.

Now Nwegi is working at the 30-hectare Mukweji farm that Katanga Mining established as a social development project.

"My life is totally different now. Now I know I will have enough money each month to feed my family and pay school fees," said Nwegi, who gets a salary of $100 a month.

Around 1,000 illegal miners are estimated to be still working on Katanga's 157 sq km concession and about 25,000 remain in the Kolwezi area.

The government is keen to halt illicit mining since it gets no tax revenue from shadowy middlemen who smuggle the metals outside the country.

But mining firms and local officials have been grappling with what to do with thousands of informal miners who entrenched themselves at abandoned mines to eke out a living. Some firms faced rioting when they tried to expel illicit miners, angry they were losing their only means of scraping a living.

"You cannot simply say, 'Get off the concession and you will have no pay'. They need alternatives," said Louis Kasuyi, vice president of government relations for Katanga's local unit.

Katanga has hired several hundred former small-scale miners to join its workforce of around 2,000 at the Kamoto mining operations it is spending $425 million to rehabilitate.

Worldwide an estimated 13 million people, including one million children, work as small-scale miners in 55 countries, the International Labour Organisation has said.

INFRASTRUCTURE

As the government grapples to revive services after the elections and years of civil war, mining companies have been key in helping to rebuild infrastructure in the region.

In some cases, the firms are building roads out of necessity to gain access to mine sites and export routes, but they are also aware of global pressure for mining companies to help improve local communities. The Congolese government is undertaking a sweeping review of mining licences, and one issue is how much firms are boosting development.

In another area of Congo's copperbelt, Canada's Anvil Mining has agreed to spend 10 percent of profits from its Dikulushi mine on the community.

The spending has transformed the area 400 km (250 miles) north of the regional capital Lubumbasi, which now has new roads, water boreholes, a school and a medical clinic.

The company is building a 192-km (119-mile) road south of the mine which will cut travel time from eight days to six hours, mine manager David Newton said. The mine has been using an alternate route through Zambia to export its output.

The injection of economic activity has sparked a burst of small-scale activity, including local people improving homes.

"The amount of building going on here is enormous... People have confidence now after the election -- they know they will not get looted or raped now," Newton said.

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