The Panguna mine was operated by BCL, majority-owned by Rio Tinto, for 17 years from 1972 until 1989, when operations were suspended due to an uprising against the mine and subsequent civil war.

Castillo says he wants to increase spending on healthcare and education by raising the funds from mining tax hikes.

Brazilian miner Vale said on Monday that it had produced 75.7 million tonnes of iron ore in the second quarter, with output of 41,500 tonnes of nickel.

Technology would replace indium, a rare chemical element widely used in smartphones and computers.

Nickel matte output stood at 15,048 tonnes, down from 18,701 tonnes a year earlier.