NEW YORK ( TheStreet) -- Aluminum Corp of China ( ACH) has dropped its plans of investing $2.5 billion in a bauxite and alumina project in Australia citing rising costs and deteriorating market conditions."The cost was too high for us, and we just don't see the project generating much of a return," Chalco's vice president, Lu Youqing, told the Wall Street Journal. However, he did not rule out the possibility of discussing other development options. "We look forward to discussing new development and investment options for Chalco with respect to the Aurukun resources, as we continue to seek opportunities to invest in the resources sector in Australia and Queensland," he added. Analysts reckon that this presents an attractive opportunity for Rio Tinto ( RTP) who had been in talks with Chalco about cooperating on infrastructure. Moreover, Rio also owns the adjacent Weipa bauxite mine. "Rio is the obvious choice to move into Chalco's space given its dominance of this sector in Australia," Grant Craighead, a mining analyst for Stock Resource in Sydney told Reuters. Furthermore, it might also prompt Alcoa ( AA) to re-submit their proposals. In another major development, Australia's new Prime Minister Julia Gillard replaced the much talked-about resource super profits tax with a mineral resource rent tax. The new resource tax will apply from July 1, 2012, only to mined iron ore and coal, with all other minerals excluded. The Gillard government rolled back the tax to 30% from the originally announced 40%. Moreover, the tax will be levied on profits exceeding 12% rate of return, rather than the 6% proposed earlier. The three majors, BHP Billiton ( BHP), Rio Tinto and Xstrata welcomed this development. "The companies agree that the proposal presented by the Government represents very significant progress towards a minerals taxation regime that satisfies the industry's core principles," the companies revealed in a joint statement. Investors cheered the news too, as BHP, Rio and Xstrata gained 1%, 1% and 3%, respectively, in trading in London, while the FTSE 100 index was up 0.4%. U.S. miner Peabody Energy ( BTU) might also be a potential beneficiary as it has significant coal operations in Australia.