The company, the second-largest supplier of explosives to the Australian mining industry, said it had already sunk $280 million into the plant.
Dyno Nobel chief executive officer, Peter Richards, said the company had faced increasing cost pressures and substantial delay in getting the plant up and running.
As a result, the project no longer met its internal financial criteria and has been suspended indefinitely.
The company also said was "investigating its options" for supplying ammonium nitrate to customers that it had planned to service from the Moranbah plant.
In February, Dyno said it had secured long-term commitments from the likes of Anglo Coal, Rio Tinto and Xstrata for ammonium nitrate from the plant, which was to produce 330,000 tonnes per annum.
The Moranbah project team is being retained to consider alternative options for the project.
Ammonium nitrate is used in fertiliser, as well as explosives.
Shares in Dyno Nobel took a battering on the announcement yesterday afternoon, shedding over 13% or 33c to close at $2.19.