PNG Nickel Mining Project to Resume After Attacks on Staff

The Australian partner in a $1.7bn nickel project being built in Papua New Guinea was hopeful construction work would resume later on Friday after an attack on Chinese workers earlier this week shut down operations.

Landowners at the Ramu mine site in Basamuk province attacked Chinese workers and shut the gates on Sunday over delays in holding a mining review to discuss working conditions at the project, majority-owned by China Metallurgical Construction Group Corp (MCC).

"We're seeing a return to normal now after a tense several days and we are confident that any differences can be worked out enabling development of the project to proceed," John Gooding, managing director of Highlands Pacific Ltd told Reuters by telephone from Brisbane.

"These issues unfortunately flare up from time to time," he said.

Construction of the Ramu mine has been plagued by disputes with local landholders and MCC has in the past run foul of Papua New Guinea officials who accused it of forcing local workers to work in sub-standard conditions.

Highlands holds an 8.6% interest in Ramu, which is set to produce 31,150 tons (t) of nickel and 3,000t of cobalt annually starting in late 2009.

Employees also walked off their jobs at an ore treatment plant being built by the partners 140km (85 miles) away at Kurumbukari, calling for better working conditions and were also expected to return to work shortly, Gooding said.

Five youths arrested over the assaults, which injured five Chinese workers, pleaded guilty in a local court on Wednesday, according to local media reports.

Around $300m of an estimated $1.37bn needed to develop the project had already been spent, with roughly 200 of the 1,000 workers brought in from China to perform specialist work, according to Gooding.