The move, which is a part of BHP’s strategy to reduce costs at its Australian coal operations, will result in about 427 job losses.
Downer currently operates four pre-strip fleets at Goonyella Riverside project and expects the early termination of the contract would reduce the value of work-in-hand by about A$360m (about $340m) for the fiscal 2015 and 2016.
Downer CEO Grant Fenn said that the company would work closely with BMA through the transitioning process.
BHP coal division president Dean Dalla Vale said the termination of the contract continued cost-cutting measures that have been under way for over 18 months.
Vale added, "The coal industry is undergoing a difficult transition and to be globally competitive we have to reset the cost base of the business.
"Further measures to address wage and other costs are being undertaken at all mines in Queensland and NSW as we continue our detailed reviews of every aspect of our coal operations to ensure every operation remains operating cash positive."
Downer EDI said it is entitled to compensation for early termination, under the terms of the contract.
Earlier this week, BHP Billiton has cut 170 jobs at its Mount Whaleback iron ore mine in Pilbara citing a slump in iron ore prices.
