Labor leader Bill Shorten says the federal government should release the details of a proposed iron ore inquiry, and warned the delay is creating sovereign risk for Australia.
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At the same time, Prime Minister Tony Abbott - who on Friday said "I think we do need an inquiry" - appears to have cooled significantly on the idea, amid apparent divisions in cabinet over the issue and fierce criticism from big mining companies.
Fairfax Media has been told that both Industry Minister Ian Macfarlane and Trade Minister Andrew Robb oppose an inquiry into the sector, with Mr Macfarlane insisting five times on Tuesday that no final decision had been made on whether to proceed with an inquiry.
Fortescue Metals Group chair Andrew Forrest has led calls for the inquiry and claimed that BHP Billiton and Rio Tinto have flooded the market to drive down the price of the commodity and damage competitors.
On Tuesday, BHP Billiton chief Andrew Mackenzie warned such an inquiry would send a terrible signal to Australia's trading partners and be "a ridiculous waste of taxpayers' money" while Rio Tinto iron ore chief executive Andrew Harding said he was stunned by the public campaign waged against the company by rival Fortescue Metals Group and denied his company has flooded the market with iron ore.
On Sunday Mr Abbott vowed any inquiry would not to interfere in the iron ore market but would simply seek the facts. On Tuesday he stressed any probe would never interfere in the free market.
"We certainly haven't made any decision to have an inquiry. This is something that (independent senator) Nick Xenophon was talking about last week," he said.
"The last thing we would want is a one-sided inquiry which degenerates into a witch hunt against some of our best companies. That is the last thing we want to see, is a witch hunt against some of our best companies."
Despite Mr Abbott distancing himself from Senator Xenophon's push for an inquiry, Treasurer Joe Hockey said on Sunday that he had been discussing an inquiry with the South Australian to ensure that it was "made up of sensible people" if it proceeded.
Mr Hockey and Senator Xenophon have discussed a possible joint House-Senate inquiry, which would be led by a Liberal MP such as Angus Taylor, in a move designed to guide the process away from being one that simply targets big miners Rio Tinto and BHP and instead focuses on increasing flexibility and lowering costs for the industry.
Mr Shorten seized on the divisions in the cabinet, stating it was clear the government was in a "world of pain on this iron ore inquiry because they are sending out mixed messages".
"We haven't seen the terms of reference, the government should put out the terms of reference. Secondly, we've seen since this debate has arisen in recent days, a real cloud over our sovereign risk and reliability as an export partner, a trading partner," he said.
"The government has let this debate run on for far too long."
In an earlier interview on ABC radio, Mr Macfarlane repeatedly stated that "no decision has been made to have an inquiry" and that no discussion had been had yet about whether to hold the inquiry.
"Let's be clear - no decision has been made to have an inquiry and no one in the government wants to regulate the iron ore market. There have been claims and counter claims and that's what the ACCC [the competition regulator] is there for. They can look at those claims and we'll continue to monitor the situation," he said.
Mr Macfarlane added that he had spoken "pretty regularly" in the last two days and repeated that "I can tell you no decision has been made to have an inquiry".
The precipitous fall in the iron ore price has smashed federal government revenue and put pressure on Fortescue and other smaller mining companies.
with Melanie Kembrey
