Newcrest (ASX: NCM), Australia's largest gold miner, announced on Tuesday that its goldmine on Lihir Island in Papua New Guinea is temporarily closed due to protests from landowners.

Peter Suar, chairman of the Lihir Mining Area Landowners Association (LMALA), said all of Newcrest's mine operations shuttered at 12:45 p.m. on Sunday by using a traditional activity considered a part of Lihir's grievance mechanism, The Australian reported.

That is by placing gorgor plants around the mine site. Gorgor, a type of root crop ginger, is traditionally used by clan elders to settle land disputes peacefully. Placing the plant on a land is a signal that the property is off limits and there is a need for talks.

In response to the Lihir tradition, Newcrest agreed to a Wednesday meeting with all stakeholders, including representatives of LMALA, the national, provincial and local governments to conduct a review of Lihir's five-year integrated benefits packages. The package includes direct compensation and various programmes for community, social and infrastructure development.

While the review is being held, Newcrest secured all facilities and placed the processing plant on stand-by.

When Newcrest purchased Lihir Gold for $9.5 billion in August 2010, it created the fourth-largest producer of gold in the world with an estimated yearly production of over 600,000 ounces of gold and 300,000 tonnes of copper.

Newcrest, with its South African joint venture partner Harmony, was slated to update this week the market on its $5-billion development plan for the Wafi-Golpu gold and copper project located on Niolam or Lihir Island 900 kilometres north of Port Moresby. The expansion project is due for completion by the last quarter of 2012.

Report of the mine's temporary closure caused Newcrest shares to go down 52 cents of 1.9 per cent to $26.70 on Tuesday.

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