BHP cans Red Hill mine

A DECISION by BHP Billiton not to push ahead with a multi-million-dollar coal mine in central Queensland is reflective of the resource industry's current period of reassessment, according to Queensland's peak resource body.

BHP Billiton has decided not to progress towards a huge coking coal mine at Red Hill, near Moranbah, after launching a preliminary study.

It was envisaged the mine would produce 14 million tonnes of coal per year and employ 2000 contractors during construction.

If approved, construction of the underground coal mine would have begun in 2013.

BHP Billiton highlighted the fact the mine was merely a study option and not due to be approved for execution for some time.

A spokeswoman for BHP pointed out full-year results released in August showed there would be no major project approvals in this financial year.

The company has made public its intention to reduce operating costs to focus on executing projects currently under construction.

Queensland Resources Council chief executive Michael Roche said BHP's move to abandon the Red Hill study was in line with other company decisions.

"The coal sector is experiencing the perfect storm of high and rising costs and there are plummeting prices," he said.

"In that context the companies are making decisions at two levels.

"One is about the costs in their existing operations and the second is what to do about plans for future projects.

"When you are making little or no profit on current businesses and when that profit is the source of money to fund new projects, you really do have to stop and take stock of how much you are spending on the future pipeline of projects.

"So we are getting a number of decisions made by companies, not just BHP, about slowing down (preparation) work of future projects and Red Hill is an example of that."

Mr Roche said alongside the increasingly high costs of building a mine in Australia and the plummeting price of coal, the domestic resource industry was competing with projects in cheaper jurisdictions.