Papua New Guinea's mining industry says a government proposal to hand ownership of resources to traditional landowners would be disastrous.

Most PNG land is in the hands of traditional landowners.

But resources lying deeper than two metres are owned by the national government.

However, the new Mining Minister, Byron Chan, wants to hand ownership of resources to landowners.

Questions

Greg Anderson, the head of PNG's Chamber of Mines and Petroleum, says that would be a nightmare.

"There's many questions that arise. If the landowners own the resource and are going to be shareholders in the project, who's going to pay for it?

"Where's the money going to come from? What's going to happen to royalties?"

Mr Anderson says identifying legitimate landowners and negotiating with them is fraught with danger and uncertainty.