A Canadian mining giant has withdrawn plans for a massive C$20.6bn ($15.7bn) tar sands mine, days before the federal government was to decide on whether to approve the controversial project.

Teck Resources’ surprise decision to withdraw from open pit Frontier Mine project landed as a bombshell on Sunday night, prompting outrage from politicians in oil-rich Alberta and cheers from environmental groups.

In a letter from Teck’s chief executive, Don Lindsay, to Canada’s environment minister, the company said it was “disappointed to have arrived at this point”.

At full capacity, Frontier would have produced 260,000 barrels of crude oil per day, making it one of the largest in Alberta’s carbon-intensive oil sands. While it had cleared several regulatory hurdles, oversight groups had warned the project would have adverse environmental impacts.

Justin Trudeau’s government was expected to rule on the project this week as his government aims to strike a balance between Canada’s commitment to reduce greenhouse gas emissions and support resource extraction. The decision was a complicated one for Trudeau, who made a 2019 election pledge to put Canada on the path to reach net zero greenhouse gas emissions by 2050.

Developments over recent days – including a last-minute agreement between the province of Alberta and two First Nations to address concerns over the project – suggested the mine might win approval.

But the project would have still faced hurdles. Teck had told the government that for it to build Frontier, it needed a pipeline to be built, a partner and favorable oil prices.

News of Teck’s decision to walk away from the multibillion-dollar project was met with frustration in Alberta, where the mine was considered essential for employment and growth. Longstanding unhappiness with the government’s energy and pipeline policy cost Trudeau’s Liberals all their seats in Alberta in October’s federal election.

“The withdrawal of Teck’s Frontier Mine application is more devastating news for the Canadian economy, especially for Albertans and indigenous people,” Alberta premier, Jason Kenney, tweeted on Sunday on the “devastating” result.

In the letter explaining its decision, Teck expressed frustration over Canada’s inability to balance resource extraction projects with a clear framework to address climate change.

“Global capital markets are changing rapidly and investors and customers are increasingly looking for jurisdictions to have a framework in place that reconciles resource development and climate change, in order to produce the cleanest possible products.

“This does not yet exist here today and, unfortunately, the growing debate around this issue has placed Frontier and our company squarely at the nexus of much broader issues that need to be resolved,” Lindsay wrote. “In that context, it is now evident that there is no constructive path forward for the project.”