Grievances by traditional landowners have halted Newcrest’s goldmining at Lihir in Papua New Guinea.
Australia’s largest listed goldminer said the Lihir Mining Area Landowners Association had required production to halt until it could discuss the compensation at the Lihir mine in the New Ireland province.
”Newcrest is striving for the prompt resolution of the matter and resumption of production,” the company said, with all stakeholders, including the LMALA and local government representative meeting to resolve the dispute.
The announcement sent Newcrest stock down as much as 92 cents , or 3.4 per cent, to $26.30 in trade.
Newcrest is in the middle of a five-year review of the integrated benefits package for local stakeholders at the mine that includes direct compensation arrangements.
PNG-based The National reported the LMALA ”shut down all mine operations at 12.45pm on Sunday by placing the traditional gorgor plant around the mine site”.
Gorgors are a type of ginger used by ”clan leaders, in consultation with landowner group members, to settle land disputes peacefully” on Lihir Island, according a 2009 report by Lihir Gold, acquired by Newcrest in 2010.
”While gorgors have historically been used on Lihir Island to denote a significant dispute, we increasingly face challenges in interpreting gorgors, as they are progressively being placed by individuals or groups who do not have the requisite customary authority,” the report said.
Evans & Partners mining equities analyst Cathy Moises said the shutdown would likely not significantly interrupt Newcrest’s gold production.
”It’s happened before and I’m sure it will happen again and I don’t expect [production] will be down for too long,” she said. Ms Moises said landowner stoppages were one of the ”hazards” of doing work in PNG.
Newcrest posted a record profit of $1.12 billion in the year to June, up 23 per cent from the previous year, helped by soaring gold prices, which hit a peak of $1900 in September 2011 and have since fallen to about $1600.
The company said it expected gold production to rise 5 per cent in 2012-13 to 2.3 million to 2.5 million ounces.