Construction of Papua New Guinea's Ramu nickel mine and processing plant has resumed a week after a a fight involving around 70 Papua New Guinean and Chinese workers shut operations, 8.56 percent owner Highlands Pacific Ltd (HIG.AX) said on Friday.

The project, estimated to cost $1.7 billion, remains on schedule to start in late 2009, Highlands said.

Fighting erupted among workers and villagers angry at Chinese managers over an industrial accident involving an employee at the remote site.

The project is majority-owned by Chinese state owned China Metallurgical Construction Group Corp and is being designed to supply stainless steel mills in China.

Local employees and villagers involved in the fighting handed themselves into the local police station in Madang, Highlands said in a statement.

The dispute has prompted an official apology to the Chinese government by Papua New Guinea's Acting Prime Minister Puka Temu, according to Highlands.

The project has been plagued by disputes with local workers. China Metallurgical has been accused by PNG officials of forcing locals to work in sub-standard conditions.

Last August, local labourers attacked Chinese workers and shut the gates to the project over working conditions in the isolated site on the side of a jungle-clad mountain.

Papua New Guinea nationals involved in the incident this week presented several pigs to Chinese co-workers, a traditional peace offering in the island nation.

Production from Ramu at its peak is forecast by China Metallurgical at 31,150 tonnes of nickel plus 3,000 tonnes of cobalt annually.

(Reporting by James Regan)

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