Miners wary as PNG court halts nickel operations

The court, sitting in Madang, close to the project, and with judge David Canning presiding, has upheld an interim injunction stopping the construction, which includes blasting coral reefs off the Basamuk area.

The injunction was taken out by four people living on the Rai Coast where the mine's tailings are intended to be slurried out to sea, a process that has been the most contested element of the project since it started.

The four claim that the discharge of tailings risks causing irrevocable damage to their lifestyle that depends heavily on marine life. They are demanding a further environmental assessment of the potential impact.

The defendants in the case -- led in court by Australian lawyer Ian Molloy, who specialises in PNG law -- are the MCC, the government's Mineral Resources Authority, and the Department of the Environment and Conservation. The original interim injunction was granted on March 19 and the MCC filed an application to lift it on March 24, which the MRA did on April 7.

Brisbane based Highlands Pacific, which holds 8.56 per cent of the project, filed a statement to the Australian Stock Exchange yesterday that "this claim is not supported by the legally recognised landowners at the mine site, on the inland and coastal pipeline route, or at the process plant site".

Highlands managing director John Gooding said that "all defendants in the claim are reviewing the situation in order to decide the next step in overturning the injunction". The company said that "the injunction only prevents work on the placement of the deep sea tailings displacement systems in the ocean, whilst other construction and commissioning activities are continuing normally at the project".

The group who obtained the interim injunction are now seeking to make it permanent.

This would trigger the need for a total reconfiguration of the project, which has always been predicated on dispersing its tailings in the ocean, as happens at Lihir goldmine.

Greg Anderson, executive director of the PNG Chamber of Mines and Petroleum, has warned that "the whole mining and petroleum industry is monitoring this case closely", and that its outcome "is critical to the future investment environment of the country".

He said the chamber is particularly concerned about the broad security of tenure risk issues that such disruptive actions introduce. The court battle is being played out against the background of campaigning for a by-election for the Rai Coast seat in the national parliament.