Proposals from Australian Indigenous Resources and Glencore International were refused on grounds that the benefits of the plans for local groups in the western Cape York region were insufficient, with overly long time frames.

State Development, Infrastructure and Planning Minister Jeff Seeney said the government was determined to avoid the mistakes of the past, where companies were granted rights but were later unable to realise commitments made.

"We have decided to bring this process to a close and revisit this development opportunity at a later date, rather than take a chance that the objectives might one day be satisfied by one of the proponents," he said.

"The state government remains interested in developing this resource for the benefit of the local community of Aurukun and all Queenslanders.

"Our door remains open to proposals which would develop these resources in a timely fashion, and to other resource development on the Cape that have the potential to deliver economic benefits."

In September last year, AIR and Glencore International submitted proposals to the government to develop the project.

They were the only two operators among a shortlist of five developers to submit proposals after Aluminium Corporation of China (Chalco) and Rio Tinto backed out and Cape Alumina Consortium missed the government deadline.

Seeney said that when the government opened the door for expressions of interest in late 2012, it made a primary goal of delivering benefits to the people of Aurukun.

"We wanted proponents we could rely on to get this mine up and running in a reasonable timeframe and who could make a long-term commitment to Queensland for the benefit of the traditional owners of Aurukun," he said.

The minister had emphasised during the proposal process that the shortlisted group of developers had the opportunity to meet with the Ngan Aak-Kunch Aboriginal Corporation, which represented the native title holders for the resource area - the Wik and Wik Way people, and the Aurukun Shire Council to discuss and refine their proposals.

The Aurukun deposit has a 650 million tonne resource.

Chalco previously had a $A2.5 billion deal with the Queensland government to develop the deposit, but that was scrapped in 2010 due to low aluminium prices.

Shelving of the project's immediate development follows a November decision by the state government which aimed to ban mining on Cape York's Steve Irwin Reserve, a bauxite-rich region overlapping Cape Alumina's Pisolite Hills project.

The environmental initiative resulted in the breakdown of a co-development deal between Cape Alunina and Metrocoal.

The Queensland Resources Council said at the time that the government was killing the project with legislation that did not appear to have been developed in consultation with Cape York communities.