Pirates holding a Ukrainian arms ship off the Somali coast have rejected a local mediator, delaying efforts to free the freighter laden with battle tanks and others arms, elders and a pirate said Sunday, AFP reported.

They said the pirates had agreed Saturday to free the ship, hijacked on September 25 while headed to the Kenyan port city of Mombasa, but later walked out of the deal insisting that Somali mediators be withdrawn.

"The talks between pirates and ship owners totally stopped yesterday (Saturday) after the pirates insisted Somali brokers be removed from the process to negotiate," said Ahmed Abshir Hasan, an elder in the pirates` lair of Harardhere.

"The commanders of the pirates on the ship reported to us that the talks totally stopped, we don`t know why they refused those brokers in the last minutes after working between them for the last week," he told AFP.

Elders in Harardhere, about 100 kilometres (60 miles) south of Hobyo, where the MV Faina with 21 crew members is anchored, said the hijackers had settled for a 10-million-dollar (7.5-million-euro) ransom.

They had initially demanded 35 million dollars before dropping the figure to 20 million.

"They agreed to receive 10 million dollars for the release of the ship but the talks were stopped because of the Somali brokers. They said the process will resume in four days with new brokers," said Abdullahi Moalim Afrah, another elder.

One of the pirates told AFP: "We were close to agreeing on a ransom (figure) but we got out of that deal because of the Somali brokers who are going between us.

"We don`t want any Somali broker to get involved in this deal and that is why we stopped the talks," added the pirate, who did not want to give out his name.

US warships and navies from other nations are shadowing MV Faina to prevent the pirates from offloading the cargo.