BEIJING, May 21 (Reuters) - A chemical factory still operating in the area of China devastated by last week's earthquake poses a huge risk to local people and the environment, Greenpeace said on Wednesday.

Although impressed with the government's response to the crisis, the environmental pressure group said authorities must strengthen enforcement of a chemical production ban in the disaster zone.

"We have discovered at least one ... chemical factory which is secretly operating," Greenpeace campaigner Yue Yihua said in a statement on the group's website (http://www.greenpeace.org).

"We have notified the Ministry of Environmental Protection about such illicit operations."

Yue said Greenpeace, which sent a research team to the quake-hit southwestern province of Sichuan, had also raised concern about the placement of a relief camp for victims next to an aluminium sulphate factory that had ceased operation.

"The refugees had been drinking water untreated from a well behind the factory before they had any access to relief supplies," Yue said.

The areas hit hardest by the quake were not heavily industrialised but were home to zinc smelters, chemical factories and the country's chief nuclear weapons research lab.

China says it has ensured the safety of all key sites, while remaining alert to the threat of leaks, including radiation.

More than 41,000 people, mostly in Sichuan, had been confirmed dead and some 33,000 remained missing, the government said on Wednesday. (Reporting by Simon Rabinovitch; Editing by Jeremy Laurence and Alex Richardson)

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