Once fully operational, the plant will have the capacity to refine 100 million litres of waste lube oil from engines, hydraulics and gear oils per year.

It could equate to up to 100% of Queensland's waste lube oil.

The plant is a joint venture between Southern Oil and JJ Richards & Sons.

It was officially opened by Queensland Environment Minister Andrew Powell.

"This is a significant opportunity for oil reprocessing, not only in Queensland but across Australia and I commend Southern Oil and JJ Richards on their commitment to this important project," Powell said.

"Queensland makes up 30% of Australia's annual production of waste lube oil, with mining being a major contributor.

"We are working with business and industry to use innovation to grow resource recovery and improve environmental outcomes, particularly in regional areas where mining activities occur."

Southern Oil managing director Tim Rose said the plant signalled the next generation in waste oil management.

"This re-refining plant represents a fantastic environmental opportunity for the state and for industry," Rose said.

"It is the only facility capable of recycling waste lube oil back into base lube oil in Queensland.

"Now we need strong support from waste oil producers like mines and local governments to direct their waste lube oil to be re-refined, rather than burned and wasted, which is what mainly happens now.

"Our re-refining process produces no waste.

"Every component is reused and 99% of the lube oil component in the waste oil is recovered as high quality lube oil for re-use."

"The waste oil will be collected from the site of the waste oil generator, for example a mining operation in Queensland, and transported to an aggregation facility where it will undergo primary treatment.

"Once this is completed, it will be taken in bulk to the Northern Oil Refinery at no cost to the generator."

The oil refinery is expected to create 40 full-time positions.