The company said it needs more certainty about the proposed levy before committing an approximate A$30m ($26.9m) over the next three years in the exploration activities in the Mount Isa and Cloncurry regions.
Xstrata Copper North Queensland chief operating officer Steve de Kruijff said the suspension will last until there is greater certainty on the fiscal regime for future mining developments.
Kruijff said the proposed tax has introduced great uncertainty about the potential impact on the economics of developing resources into viable operations in Australia.
Copper mining, smelting and refining operations in north Queensland contributed more than $1.3bn ($1.16bn) to the Queensland economy in 2009.
BHP Billiton, the world’s largest mining company, said its expansion plans could be jeopardised by the new tax on mining profits and Rio Tinto has put some of its projects on hold while it studies the potential impact of the resource tax.