Papua New Guinea’s government has pushed legislation through parliament allowing it to gain 100 per cent ownership of the OK Tedi mine.
The mine has been embroiled in controversy since tailings from the BHP mine caused widespread environmental damage to the Fly River in the 1980s and 90s.
The laws will not only allow the government take full control over the Western Province mine but will also see the removal of an immunity deal struck 12 years ago with former owner BHP Billiton.
"The government in 2001 made a very bad decision in granting immunity to a corporate giant, preventing its own people from exercising their right under law to sue for permanent damages done to their environment and their livelihood," Prime Minister Peter O'Neill told parliament.
Profits from the OK Tedi mine will now flow to the national government, rather than being divided between the Western Province and the national government in Port Moresby, Reuters reports.
The decision has not been without its own controversy, with former Prime Minister Mekere Morauta accusing the PNG government of theft.
"This is very important legislation. For the first time expropriating assets without payment from the people of Papua New Guinea, not from foreigners," he said.
Morauta is now chairman of the Sustainable Development program, which controlled the majority stake in OK Tedi.
The 2001 immunity deal saw BHP divest its controlling 63 per cent share in the mine to the Sustainable Development Program [SDP] charitable trust, under the deal the PNG government held the remaining share.
The bill cancels the SDP’s shares and issues new shares to the government.
Despite the PNG government approving the dumping of tailings into the rivers, the legislation changes could leave BHP open to face claims from landowners over environmental damage.
O’Neill told parliament the deal was unfair and the miner must own up to its responsibilities, the ABC reported.
"This parliament has done gross injustice to our people, denying their right to have access to have their say and have their claims against the damage that was done to the environment and themselves," he said.
"This proposed bill now removes that waiver for BHP Billiton, meaning that the land owners or any other affected party are free to bring any action or enforce any right."
BHP Billiton said it is confident it cannot be sued over environmental damage by PNG, the ABC reports.
The miner said the government’s decision to revoke the immunity deal shows a lack of good faith, making PNG a risky place to invest.