Chinese mining giant, Chalco is reported to have rejected speculations that it is planning to drop building a refinery at its planned $3 billion bauxite development at Aurukun in North Queensland.

Opposition Leader, John-Paul Langbroek dismissed the media reports in State Parliament, yesterday.

The State Government granted Chalco an approval to mine aluminum at Aurukun on Cape York, in the far north, provided that it develops a refinery on the state's east coast, probably in Bowen.

Newspaper reports published on Monday claimed that Hong Kong-listed Chalco would influence the Queensland Government concerning amendment of its lease to reduce the refinery requirements.

"We are pushing forward with the project in accordance with our agreement with the Queensland Government", insisted, Chalco overseas investment general manager Zhao Zhengang yesterday.

It is reported that Chalco and the state Government are on good terms with each other and will land on a mutual understanding keeping in minds with the business principles.

The Australian believes that Chalco officials have had doubts for more than 12 months concerning the viability of the mine following a turmoil hitting the commodities markets.

In November, the Company filed for a six-month extension for a feasibility study that is now slated to be decided on within three weeks.