UPDATE 1-Skirmish halts PNG's Ramu nickel mine construction

Mon May 11, 2009 2:36am EDT

Related Topics

* Ramu nickel mine construction stops after fight

* Year-end mine start still achievable

* Misunderstanding over injured worker behind violence (Adds details, background, quotes)

PORT MORESBY, May 11 (Reuters) - A December 2009 target to complete the $1.7 billion Ramu nickel mine in Papua New Guinea was still achievable despite a halt to construction due to fighting among workers, an Australia partner said on Monday.

Construction at an ore processing plant was stopped on Friday after violence erupted over concerns about a worker injured in an industrial accident, according to John Gooding, managing director of 8.56 percent owner Highlands Pacific Ltd (HIG.AX).

The project is majority-owned by China Metallurgical Construction Group Corp and is being designed to supply stainless steel mills in China.

Production is forecast by China Metallurgical at 31,150 tonnes of nickel plus 3,000 tonnes of cobalt annually, with start-up in late 2009.

Gooding said there was damage to vehicles and buildings and a number of Chinese workers required treatment, although the project's start date was so far unchanged.

"We're still being told by the Chinese partner that they will start the commissioning process by the middle of December," Gooding told Reuters by telephone from Brisbane.

The situation was now calm, with a number of police on at the mine site investigating the incident.

It is expected that construction work will restart shortly and that there will be no significant delay to the project timeline, however the the full impact of the incident was still not known, according to Gooding.

Construction at the mine has been plagued by disputes with local workers. China Metallurgical has been accused by PNG officials of forcing locals to work in sub-standard conditions.

Last August, local labourers attacked Chinese workers and shut the gates to the project over working conditions in the isolated site on the side of a jungle-clad mountain.

In February 2009, PNG's labour department said conditions violated labour laws, citing inadequate food, sanitary facilities and housing. The department in May said it was now satisfied that conditions had improved.

But the latest fighting was not over work conditions but rumours of a death at the site involving a Papua New Guinean worker. Gooding said the employee was only injured and was recovering in a hospital in the town of Madang.

"The Basamuk Landowner Association Chairman (where the process plant is located), the Mineral Resource Authority and the provincial government, have all condemned the incident and are very supportive towards the manager and operator," Ramu NiCo Management (MCC) Limited," said Gooding. (Reporting by James Regan and Michael Perry; )

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