Papua New Guinea's (PNG) prime minister, Julius Chan, has thrown Australian mining companies off guard with an announcement on new resource project regulations. Under the new rules, future projects will have to make a "free" share available to local landowners. "In mining developments ... a 5 per cent share of the government's 30 per cent will be given free to the landowners, and paid for by everybody, that is, the consortium of developers," asserted Chan, who also hiked the royalty rate on resource projects from 1.25 per cent to 2 per cent.

Mining companies began carping within hours of the announcement. "The increase to 2 per cent (in the royalty rate) ... is regarded as excessive and invidious," said Lawrie Reinertson, managing director of Placer Pacific, a us company that manages a gold mine on Misima Island, east of mainland PNG.