Aluminum Corp of China Ltd (Chalco), the nation's biggest producer of the metal, is proceeding with plans to develop the A$3 billion ($2.5 billion) Aurukun bauxite deposit in Australia's Queensland state.

"We are pushing forward with the project in accordance with our agreement with the Queensland government," Zhao Zhengang, general manager of overseas investment at Chalco, said on Wednesday.

"Chalco and the state government are in close contact and will reach mutual understanding under business principles."

The Australian Financial Review reported on Wednesday that Chalco may seek to remove the requirement to build a refinery at the mine to process bauxite into alumina, the raw material for making aluminum, because of increased costs as well as the proposed 40 percent tax on resource profits that Australia announced last month.

Queensland Premier Anna Bligh reiterated the government's stipulation that the development must include a refinery.

"What we will not do is walk away from the requirement that whoever exploits that bauxite will be required to do secondary processing at another facility," Bligh said according to a transcript from the state parliament.

"We will not simply see it put on ships and taken elsewhere for those manufacturing jobs to be gained in other countries," Bligh said.

Queensland Minister for Infrastructure and Planning Stirling Hinchliffe said in an e-mail response to questions that the state remains in talks with Chalco regarding the development agreement for the Aurukun mine and refinery.

The company won the right to develop Aurukun in 2006.

Chalco is due to submit a feasibility study for the project by June 30, after requesting an extension of six months late last year, citing the global financial crisis, according to a statement on the Queensland government's website

The tax has prompted a savage backlash from the mining sector, the country's most valuable export industry, with global giants Rio Tinto and BHP Billiton both reviewing their Australian operations.

Mining shares have seen billions of dollars wiped off their value and the government faces a heavy opposition from the resource sector in the lead up to elections.

Andrew Forrest, head of Fortescue Metals Group, has threatened to scrap up to $15 billion in future projects planned by Fortescue if the tax goes ahead. He even led the protest in Perth against the super tax on mine profits, attracting up to 2,000 demonstrators.

Swiss giant Xstrata Plc became the latest company to suspend projects over a controversial new 40 percent resources tax.

Xstrata suspended $489 million in development spending on two Australian projects, saying a review had found the proposed tax would mean, "neither would be viable".

No Chinese company has till now suspended any mining projects in Australia because of the 40 percent tax.