By Eoin Blackwell, AAP Papua New Guinea Correspondent
THE government of Papua New Guinea is still considering extending the mining lease for OK Tedi Mining Ltd under a new management structure, Papua New Guinea Prime Minister Peter O'Neill says.Mr O'Neill said last week's media reports quoting him as saying the lease would not be extended when it expired at the end of 2013 were wrong.
"There is no divorce with OK Tedi. OK Tedi is in PNG and we will continue our engagement with them," he told reporters in Port Moresby on Sunday.
"I said the partnership between the owners of OK Tedi - that is the PNG government and the PNGSDP (PNG Sustainable Development Project) - that partnership will not continue," Mr O'Neill said.
The PNGSDP, which owns 63.4 per cent of OK Tedi, and is worth $1.4 billion, was set up by mining giant BHP when it withdrew from the project in 2002 after it reported the mine was responsible for causing major environmental damage.
He said the government would only consider extending the lease after consultation with the people and government of Western Province, where the mine is located in the Star Mountains.
PNG's National and Western Province provincial governments jointly own a 36.6 per cent share in the mine.
Mr O'Neill has previously criticised the PNGSDP as being run by BHP via remote control.
"BHP divorced us long ago, we simply didn't realise that," he said on Sunday.
"It's time for them to move on, that's precisely what this government is doing."
Late last year Mr O'Neill ordered economist and former PNGSDP chairman Ross Garnaut be banned from PNG after the latter implied the government would not spend the PNGSDP money wisely.
In November former prime minister Sir Mekere Morauta took on the chairmanship of PNGSDP.
Mr O'Neill has just returned from a three-day trip to Japan where he held talks with Prime minister Shinzo Abe and promoted PNG to investors.
Japan is a major importer of Liquefied Natural Gas and PNG's behemoth, $16 billion, Exxon Mobil lead gas project is expected to go online in 2014.
On Sunday evening Mr O'Neill is expected to greet Thai Prime Minister Yingluck Shinawatra, who is making an official trip to Port Moresby.