Queensland Deputy Premier Jeff Seeney on Monday said the project had been labeled "unrealistic" and "undeliverable."
"The significant scale, complexity and potential impacts of the proposed infrastructure are extensive and it would be many years before the whole of the planned additional capacity would realistically be warranted," Seeney said in the statement.
The massive expansion was unveiled last December under the leadership of then-Premier Anna Bligh. The project was to lift the current export capacity of 50 million tons annually to 385 million tons, making it one of the largest coal ports in the world.
In a visit to Australia the same week the project was announced, International Energy Agency chief economist Fatih Birol said Australia's coal exports are expected to rise by 20 percent to 300 million tons annually by 2020.
"Australia is gearing up for a massive export-focused expansion," he said, adding that the country needs new port infrastructure to avoid persistent bottlenecks.
But Seeney said it had become apparent that the mining sector was not supportive of the project.
Last month mining giant Rio Tinto said it would withdraw from the project, citing uncertain global economic markets, cost pressures and long time frames for regulatory approvals.
The company was one of six of the preferred developers that the government had listed, along with Anglo American, Vale, Waratah Coal, Macmines and a consortium of Peabody, New Hope, Middlemount Coal and Carabella Resources.
Seeney said Monday the government would focus on development of the T2 terminal, being developed by BH Billiton and the T3 by Hancock Prospecting, which he said is "a more practical and efficient approach to expansion of infrastructure at Abbot Point."
Queensland is the world's biggest exporter of coking coal, used for the production of steel.
"What we're now looking at is a more realistic matching of new production coming online with port capacity, but we are in no way nervous about having inadequate port capacity to meet the industry's needs," Queensland Resources Council Chief Executive Michael Roche told the Australian Broadcasting Corp., in reaction to the scrapped project.
The Sydney Morning Herald quoted UBS commodities analyst Tom Price as saying earlier this month that the Queensland Government ''never even had to build Abbot Point."
The state's coal sector, he said, already had excess port loading capacity, with utilization rates at about 70 percent -- below the desired average 90 per cent utilization.