When the decision was made in 1943 to develop the Lae area in New Guinea as a major Allied staging post and base it was quickly realised that the control of the combined Markham and Ramu River Valleys would be vital to the area's security. The valleys, hemmed in to the north and south by towering mountains, formed a flat corridor over 185 kilometres long, which in addition to providing an excellent avenue of approach to the Lae area, also offered excellent sites for the development of landing grounds. The Japanese were well aware of the significance of the valleys and had commenced work on a road from Bogadjim on the north coast which would cross the Finisterre Mountains and provide a means of moving troops and supplies rapidly into the Ramu Valley.
Operations to control the valleys began with the seizure of Kaipit by the 2/6th Independent Company on 19-20 September 1943. The overgrown airfield at Kapipit was soon cleared, allowing the 7th Division to be flown in and advance from the head of the Markham Valley into the lower reaches of the Ramu. Dumpu was captured on 4 October and here the advance was ordered to stop. It was now becoming obvious that Japanese strength was being concentrated against the 9th Division operations at Finschhafen and that they were withdrawing from the Ramu Valley back into the Finisterre Mountains. Keeping the 7th Division adequately supplied, so far from a major Allied base, was also proving a challenge. The division was thus ordered to contain the Japanese in the mountains and prevent them returning to the Ramu Valley. For their part, the Japanese had been ordered to block any Australian advance across the Finsterres which had the potential to sever their supply routes along the north coast and cut-off the forces operating further to the east.
During the first half of October, battalions of the 21st and 25th Brigades advanced into the Finisterres and conducted several limited operations to sieze key features, the most notable being the 2/27th Battalion's capture of John's Knoll and Trevor's Ridge on 12 October. The Japanese were forced back onto their main defensive positions on Shaggy Ridge, a dominating razor-backed feature, and the Australians' operations were limited to patrolling. It was December before the 7th Division had built up sufficient stores, and was given permission, to commence attacks on Shaggy Ridge. On 27 December the 2/16th Battalion captured the Pimple at the south-eastern end of the ridge, which it then held against heavy Japanese counterattacks. This action was followed on 19 January 1944 by the main operation to capture Shaggy Ridge - a three pronged attack conducted by the 18th Brigade. While the 2/9th Battalion attacked north along Shaggy Ridge from the foothold around the Pimple, the 2/10th and 2/12th Battalions advanced along the ridges either side - Faria Ridge and Cam's Saddle. The three ridges all converged at Kankiryo Saddle, the Australian's ultimate objective. The Japanese strongly resisted the Australian attacks, but heir artillery and air support proved telling, and Kankiryo Saddle was in Australian hands by 26 January.
With the capture of Shaggy Ridge, the Japanese hold on the Finsterres was broken. Rearguard actions conducted by retreating troops displayed little of the determination or tactical skill exhibited by the Japanese during the Kokoda Trail campaign. The 15th Brigade pursued the Japanese through the Finisterres and dealt with the limited pockets of resistance it encountered with little difficulty. On 13 April a patrol of the 57/60th Battalion entered Bogadjim, which was deserted the Japanese having retreated along the coast to Madang. Patrols pushed on after them. On 24 April another patrol of the 57/60th Battalion, met troops of the 30th Battalion, moving west along the coast by landing barge, east of Madang and the combined force captured a now deserted Madang, completing the capture of the Huon Peninsula.