A tense standoff has developed in waters off Somalia over an Iranian merchant ship laden with a mysterious cargo that was hijacked by pirates.

Somali pirates suffered skin burns, lost hair and fell gravely ill “within days” of boarding the MV Iran Deyanat. Some of them died.

Andrew Mwangura, the director of the East African Seafarers’ Assistance Programme, told the Sunday Times: “We don’t know exactly how many, but the information that I am getting is that some of them had died. There is something very wrong about that ship.”

The Ukrainian foreign ministry said the captain of the Faina cargo ship had reported being surrounded by three boats of armed men on Thursday afternoon.

Defence Minister Yury Yekhanurov confirmed that 33 Russian T-72 tanks and "a substantial quantity of ammunition" were aboard.

The Iran Deyanat was sailing in those waters on August 21, past the Horn of Africa and about 80 nautical miles southeast of Yemen, when it was boarded by about 40 pirates armed with AK-47s and rocket-propelled grenades. They were alleged members of a crime syndicate said to be based at Eyl, a small fishing village in northern Somalia.

The ship is owned and operated by the Islamic Republic of Iran Shipping Lines, or IRISL, a state-owned company run by the Iranian military.

According to the US Treasury Department, the IRISL regularly falsifies shipping documents to hide the identity of end users, uses generic terms to describe shipments and operates under various covers to circumvent United Nations sanctions.

The ship set sail from Nanjing, China, at the end of July. According to its manifest, it was heading for Rotterdam where it would unload 42500 tons of iron ore and “industrial products” purchased by a German client.

The vessel’s declared cargo consists of “minerals” and “industrial products”. But officials involved in negotiations over the ship are convinced that it was sailing for Eritrea to deliver small arms and chemical weapons to Somalia’s Islamist rebels.

Iran dismissed reports that its vessel hijacked by Somali pirates in the Gulf of Aden was carrying a dangerous consignment.

The pirates were angry because when they opened the cargo of the Iranian ship, several Somalis died, while others lost hair and suffered skin burns, Reuters quoted Andrew Mwangura, of the Kenyan-based East African Seafarers' Assistance Program, as saying. "It must have been a very dangerous chemical," he added, without identifying the substance.

Iran's shipping company, however, said on Monday that the report was a "sheer lie", adding, "The ship - Iran Diyanat had no dangerous consignment on board."

MS Iran Deyanat belonging to Iran state shipping company was hijacked a month ago, a common occurrence at the Somali coast though the ship of 45,000 tons is unusually large for pirates. Oddly, they asked for an unusually small ransom, just $200,000 which Iran allegedly paid.

Upon bringing the ship to Somali, the pirates tried opening its containers, but failed. They, however, received typical radiological skin burns and their hair fell out. The damage can be of chemical origin, too.

The hijackers have yet to respond to the USD 7m offer, but a source close to the pirates told Press TV that the pirates are likely to accept the bribe and allow the Americans onboard the vessel.

The US the naval fleet off the Somali coast alleges that The Iran Diyanat was carrying 'uranium and chemical weapons'.