The Premier of Australian Queensland Anna Bligh revealed on Thursday that a decline in the aluminum industry has forced Chinese-owned alumina company Chalco to pull out of a proposed bauxite mine in Aurukun, far northern Queensland.

Chalco was awarded a permit to mine bauxite deposits in the state on the condition of building a 2.2 billion Australian dollars (1.8 billion U.S. dollars) aluminum refinery.

The company is one of the world's largest producers of alumina and the Aurukun project was to be Chalco's first investment in Australia.

Bligh said the state government has not given up on the project and is now working on other options.

"While the current agreement can't stand, we will continue discussions with a view to hopefully signing a new agreement that might have some different characteristics," she said.

"While it is not possible for Chalco to commit to the project as is required under the agreement to build and operate an aluminum refinery here, they are prepared to look at possible different forms of investment."