PNG court lifts injunction on $1.6bn Ramu Nickel project

Papua New Guinea's mining industry breathed a collective sigh of relief yesterday when the country's National Court lifted an injunction on the completion of the $1.6 billion Ramu Nickel project.

The commissioning of the mine, the first to be built and operated by a Chinese company in PNG, had been set back 16 months by injunctions over the potential environmental impact of its disposal of tailings in the ocean.

It is now likely to begin producing nickel before the end of the year, building up to full capacity within 18 months.

The mine is in mountains south of Madang, from which the nickel is to be piped in a slurry 130km to the coast for partial processing before being shipped to China.

When judge David Canning granted interim injunctions to landowners last year to halt the project, the government responded by passing legislation banning such injunctions and demonstrations, or other forms of protests, against resource projects that had been officially approved.

The legislation provoked fierce opposition and is still on ice, yet to be ratified.

Yesterday, Justice Canning refused the application for a permanent injunction, citing among his reasons the time it took to bring the action (long after the government had approved deep-sea disposal), the consequences for the companies involved, and for investor confidence in PNG as a whole, where resources are the state's dominant income earner.

But he said there was a likelihood that irreversible environmental harm might result from the waste dumping.

Other major investors in PNG mining projects have been anxiously watching the case, concerned that they too may find that even after receiving government approvals they may be prevented from operating by legal actions.

The major shareholder in Ramu is Chinese state-owned Metallurgical Construction Corporation, with PNG registered Highlands Pacific (which is listed in Australia and PNG) owning 8.56 per cent, potentially rising to 20.55 per cent.

Highlands Pacific managing director John Gooding said the delays had probably cost the partners about $100 million, as well as the blows suffered to his company's share price.

But he said yesterday's outcome had reinforced the position taken by Highlands in the original feasibility study -- namely, that deep-sea disposal is viable.

"It's good news," Mr Gooding said yesterday.

"This has been an Olympic battle. Now let's go on and build it, and contribute for the next 20 to 30 years to the PNG economy and to the stakeholders.

"This is a great result and the right result."

- The Australian