The PNG Parliament has agreed to repeal legislation that granted BHP Billiton immunity from legal action in relation to damage caused by mining operations at Ok Tedi.
BHP divested its majority share of the mine to the PNG Sustainable Development Program and was granted legal immunity in return.
But while the move apparently clears the path for people to take legal action against the company, BHP said it was confident it had indemnities in place to protect shareholders from potential claims.
"In relation to the protections that the PNG Government has said it would remove from BHP Billiton, we remain confident that we have other indemnities in place and that our shareholders are not exposed to potential claims," BHP Billiton said in a statement.
"BHP Billiton does not own Ok Tedi Mining,"
"We transferred our shares in Ok Tedi to a charitable entity, PNGSDP, in 2002 so that the revenues from them could be used for the benefit for the people of the Western Province and PNG.
"The sale or expropriation of PNG Sustainable Development Program's equity in the Ok Tedi mine is a matter for the directors of PNGSDP."
BHP said the removal of protections that were legislated for BHP Billiton at the time that it gifted its shareholding to PNG raised the question of sovereign risk.
The mining major said while the arrangements around its exit from Ok Tedi were agreed with the PNG government in 2001, unwinding them showed a lack of good faith by the current government.
"BHP's preference at the time we made those arrangements was to close the mine altogether, but the PNG Government required that it remain open," the company said.
"We agreed the protections in that context.
"BHP Billiton does not believe that consenting to changes to the governance arrangements relating the long term fund would be consistent with the purposes for which the fund was established.
"PNGSDP has a good record in managing the funds to advance worthwhile projects in the region. The fund is situated in Singapore and is not linked to potential changes in the ownership of PNGSDP's equity in the Ok Tedi Mine."