A Chinese nickel mine operator has apologised after accidentally spilling an estimated 200,000 litres of toxic slurry into a bay in Papua New Guinea's Madang province, turning the water bright red and staining the shore.

Key point: The spilled material is "very toxic" and rich in heavy metals

The spilled material is "very toxic" and rich in heavy metals However PNG authorities say there are no immediate safety concerns

However PNG authorities say there are no immediate safety concerns Compensation and punishments will be pursued, officials said

Mining authorities in PNG said the spilled material was a mineral-rich slurry that had been piped to the processing plant at Basamuk Bay from a nickel mine site 135 kilometres inland.

Mineral Resources Authority managing director Jerry Garry told the ABC's Pacific Beat program the slurry was "very acidic".

"In terms of the heavy metals — in terms of nickel, cobalt, magnesium — they are very toxic," he said.

Mr Garry said the spill occurred when an electronic fault caused a pump failure, which went undetected by workers, leading to an overflow.

Part of the rocky shoreline was also stained due to the toxic spill. ( Supplied: Nigel Uyam )

The spill occurred on August 24, and photos showing the contamination caused outrage on social media.

"The people from the village they went down to the beach … and they realised the water was contaminated and the colour had turned to red," Nigel Uyam, a local villager who took the first photos of the spill, told the ABC.

"They are angry … we are trying to control the angry people and we are trying to control the situation."

Authorities said compensation would be pursued and a punishment would also be imposed on the plant operator, Ramu Nickel, which is owned by the Metallurgical Corp of China (MCC).

Ramu Nickel's vice-president, Wang Baowen, said the company was extremely concerned about the incident and "committed to address any compensation".

$2b nickel mine's troubled past

The Ramu Nickel plant has had a controversial history in Papua New Guinea. ( Facebook: Kessy Sawang )

The spill is the latest incident in the Ramu Nickel mine's short but troubled history. The $2 billion project was the first Chinese resource investment in Papua New Guinea.

The start of operations were delayed by a year as landowners fought an unsuccessful legal battle to prevent it from dumping waste into the sea by a process known as deep-sea tailings disposal.

A clash of cultures saw local staff fight Chinese employees in 2012, while armed villagers attacked the mine site in 2014, injuring staff and destroying property and equipment.

Residue samples have been sent to Australia for testing. ( Supplied: Nigel Uyam )

A Chinese worker was killed and two local staff injured in a workplace accident in 2016 that saw the mine temporarily closed — that same year slurry leaked from the pipeline connecting the mine to the processing plant.

"People have been raising concerns about the way the plant has been operating for years," Gavin Mudd, an associate professor at RMIT University's engineering department, told the ABC.

"If this happened in Australia, there would be heads rolling."

Despite the toxic nature of the spill, the mineral authority's inspector found no immediate safety concerns and no reason to shut down the plant's operations.

Residue samples have been sent to Australia for testing, with results expected in under a month.

ABC/wires