Aluminum Corp of China said its $2.5 billion agreement with Queensland state, Australia, to develop bauxite resources has been terminated due to adverse changes in the aluminum sector.

In a statement, Aluminum Corp, said the Aurukun Project has been hindered by various unfavourable factors to the extent that it cannot be implemented in accordance with the development agreement.

The agreement was terminated after it was expired on June 30, 2010, the company said.

The company could not continue to the project due to rising costs, an oversupplied market and a requirement to build an expensive refinery in Queensland state apart from the proposed mining tax.

Aluminum Corp has previously proposed a 10 million tonnes a year bauxite mine and 2.3 million tonne alumina refinery in the eastern state of Queensland due to start production in 2013.