The Ramu nickel mine in Papua New Guinea's Madang province has been found to have mismanaged toxic waste it dumps into the sea.
The provincial government engaged an oil spill response consultant from Sweden to investigate recent discolouring of local waters and the deaths of fish species.
Local media is reporting Alex Mojon saying he was shocked by the catastrophic impact of mine waste on the marine environment.
In August, an overflow of 200,000 litres of 'toxic slurry spill' off the Rai Coast turned the sea red and was linked by locals to numerous health problems.
But the toxic legacy stretches back about seven years.
Dr Mojon said the mine operator had been releasing millions of litres of toxic waste annually into the sea and expecting it to disappear.
Earlier this month a local spokesman for the mine owner Metallurgical Corp of China assured the public that its Deep Sea Tailing Placement system in Basamuk Bay was safe.
However, Madang's government is now considering legal action against the company.
At the start of the month, the Madang provincial administration temporarily banned sale and consumption of fish in the province, following the reported death of a local man after he ate poisoned fish.