OTML’s long-running project to extend mining to 2025 will not receive government approval. According to PNG’s The National, O’Neill told parliament it would not renew the mining licence when it expires next year.

“The government will break its partnership or marriage with OTML,” he reportedly said.

O’Neill said the government would own and operate the mine through PNG Sustainable Development Program Limited, which has a 63.4% stake of OTML and was set up by BHP Billiton after it exited PNG in 2002 due to the environmental damage caused by its past operation of the mine.

How the government will gain control of Singapore-based PNGSDP, which had $US1.43 billion of net assets in 2011, is unclear as the government only nominates one member of its board.

“We will restructure the board of PNGSDP with our own people managing it, not by strange people who live beyond and do not know our needs,” O’Neill reportedly told parliament, which echoes his previous criticisms that BHP ran PNGSDP by remote-control.

A PNGSDP spokesman yesterday said its chairman and chief executive officer would not yet comment on the reports.

A similar stance was taken by OTML on Wednesday night.

“The Ok Tedi Mining Limited managing director and chief executive officer, Nigel Parker, is aware of the Prime Minister’s statement in parliament today regarding the Ok Tedi mine life extension, but is unable to make further comment at this point in time as it is a matter concerning the State of Papua New Guinea and PNG Sustainable Development Program Limited, as the shareholders of Ok Tedi Mining Limited,” an OTML spokesman said.

The PNG national and western provincial governments collectively own a 36.6% stake of OTML.

Under its extension plans, OTML was aiming to mill 25 million tonnes per annum of ore until 2016, then lower production to about 17Mtpa.

The feasibility study for the proposed underground operations is yet to be unveiled, but last year it was targeting 14Mt at an exceptional grade of 1.26% copper and 1.42 grams per tonne of gold as against a mine average of 0.78% and 0.91gpt in 2011.

OTML is the single largest contributor to PNG’s tax coffers in recent years, although the $US19 billion ExxonMobil-led PNG LNG project is expected to start exports in 2014, with some analysts forecasting it will begin in the December quarter of the year.