Cape Alumina's decision to scrap a $1.2 billion dollar bauxite project in Queensland due to environmental laws shows a "cloud of uncertainty" is settling over part of the state, an analyst says.
Cape Alumina on Monday said its Pisolite Hills project had been rendered unviable by the Queensland's Wild Rivers declaration.
The laws were introduced to curb development around near pristine rivers, and the Pisolite Hills project was subject to 500 metre-wide buffers around high preservation areas.
Advertisement: Story continues below Cape Alumina said the decision would reduce the amount of bauxite able to be mined at its project site by 45 per cent, rendering the project unviable.
"It does throw a huge cloud of uncertainty over the area in terms of whether companies will spend further dollars on production and development up there," said Mine Life resources analyst Gavin Wendt.
"All of a sudden the Queensland government has come in an effectively changed the rules.
"Other companies that were spending money up there would be thinking twice and giving priority to areas elsewhere," he said.
Cape Alumina managing director Dr Paul Messenger said Queensland would be denied $1.2 billion in new economic activity and hundreds of jobs.
The project was to have cost about $400 million, with $21 million already invested.
"This project would have been a boon for the traditional land owners and Aboriginal people of western Cape York, providing them with a rare opportunity to gain social and economic independence and prosperity," Mr Messenger said.
Cape Alumina remained in a trading halt on Monday.
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