PNG nickel mine reopens after rioting

A Chinese-owned nickel mine in Papua New Guinea has resumed production three days after an attack by armed villagers forced work to halt, a Chinese embassy official in the South Pacific country said on Thursday.

The $2.1 billion mine, forecast to produce 22,000 metric tons of nickel in 2014, is operated by Ramu NiCo, which is majority owned and run by Metallurgical Corp of China Ltd (MCC).

Equipment including nine excavators, a fuel truck and a lighting vehicle were burned, and five Chinese workers were injured in Monday's attack, the embassy said, confirming earlier media reports.

"The embassy strongly condemns these brutal attacks and makes an urgent request to the PNG government to take immediate and effective measures to prevent the violence from recurring and ensure the safety of the personnel and properties, and to bring the attackers to justice," an embassy official said in an emailed response on Thursday.

"With the assistance of the police force, the situation is under control, and mining production has resumed," the official said.

Mining and energy projects are a major source of income for Papua New Guinea, but outbreaks of violence sparked by landowner disputes and environmental concerns are not uncommon.

At least four people were killed in 2009, when anti-Chinese sentiment erupted into violence and looting in the capital of Port Moresby and a second city, Lae.

The riots were sparked by a fight between local and Chinese workers during the construction of the Ramu project, according to media reports at the time.

Preliminary investigations were said to show that the latest attacks were spurred by concerns about the company's hiring policies for mine workers. Ramu NiCo has been training locals so they can work at the mine.

The development of the Ramu mine was delayed by more than two years amid concerns about the dumping of mine waste in the ocean.

MMC, Ramu NiCo and minority owner Highlands Pacific did not respond to requests for comment on the situation.

Shares in Highlands Pacific fell 8.3 percent in a flat Australian share market.

LME nickel prices edged up about 1 percent after the shutdown was initially reported. Prices for the metal, used in stainless steel production, soared to their highest in more than two years in May, above $21,000 a metric ton, after a ban on ore exports from major producer Indonesia was enacted in January.

Earlier this year, a chemical spill sparked riots in New Caledonia, which closed Vale's Goro nickel mine for about a month, adding to supply concerns.

Prices have since eased, to about $18,700 on Thursday, after Indonesia's new government took a softer stance on export taxes for copper, turning investors cautious that it might also relax restrictions on nickel.

"Given that the Ramu mine is not very big, we don't think the shutdown will have a large impact in the international market right now," said an executive at a large Chinese trading firm that imports nickel.

"LME nickel stocks are at a record level, and more hidden stocks in bonded warehouses in Shanghai are continuing to go to LME warehouses in Asia because of weak demand in China."

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