The state opened the Aurukun deposit to bids in late 2012, attracting interest from five companies, including Rio Tinto, and receiving final bids from Glencore and Australian Indigenous Resources Pty Ltd (AIR).
"After carefully considering the proposals, the government is not satisfied that either bid ... could deliver what the government had hoped for in a timely manner," Queensland deputy premier Jeff Seeney said in a statement.
The state remains open to proposals that would open a mine "in a timely fashion" and "for the benefit of the local community", he said, without specifying how quickly it wants a mine developed.
Bauxite is used to make alumina, which is then refined into aluminium. Bauxite prices have improved on the back of a recent ban on exports from Indonesia, the main supplier to top aluminium producer China, but the Aurukun bid came at a time when most miners, facing weaker commodity prices, had retreated from building any mines from scratch.
The Aurukun deposit, where reserves could support production of 6.5 million tonnes a year or the equivalent of nearly 10% of China's bauxite imports in 2013, has long been stuck on the drawing board. It was held until 2004 by Alcan of Canada, which failed to develop it over 29 years.
It was then awarded to Aluminium Corp of China (Chalco), which planned to develop the mine as part of a $2.5 billion alumina and aluminium project, but gave it up after the global financial crisis spread to commodities markets.
Aurukun is mainly an Aboriginal community of about 1,000 people in the remote area of Cape York, near similar deposits mined by Rio Tinto.