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Glencore Xstrata on Monday dumped plans for a new billion-dollar coal export terminal in Australia's Queensland state, citing poor current market conditions and concerns about the industry outlook.
The decision to scrap the Balaclava Island Coal Export Terminal, effective immediately, follows the merger of mining giant Xstrata with Swiss commodities trader Glencore and a review of the project.
"This decision has been made as a result of the poor current market conditions in the Australian coal industry, excess port capacity in Queensland, specific shipping limitations and concerns about the industry's medium-term outlook," Glencore Xstrata said in a statement.
The proposed terminal, about 40 kilometres (25 miles) north of the city of Gladstone, would have allowed for the export of up to 35 million tonnes of coal per year from the Bowen and Surat basins to foreign markets.
The commodities giant did not put a figure on the cost of the proposed development, but it was reportedly about Aus$1 billion (US$1 billion).
"In the long-term, we believe Australia will need to increase its coal export capacity in an efficient and internationally competitive manner, in response to increased demand for coal in Asia," Glencore Xstrata added.
It called on the Queensland government to ensure its long-term ports strategy provided for the growth of coal export capacity "that is essential to the Australian economy and the maintenance and improvements of people's living standards overseas".
The Australian coal sector, a key export earner, has been hit by lower prices and reduced demand from Asian markets.
A slowdown in China and debt strains in Europe and the United States have weighed on mining companies in the past 12 months, with projects delayed or shelved as commodity prices have plunged on a drop in demand.