Prime Minister Tony Abbott appears to have gone cold on the idea of an inquiry into the iron ore sector, as big miners BHP and Rio Tinto have launched a ferocious attack on Parliament examining the sector.
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Senior Coalition members discussed the matter on Monday night and, in addition to Trade Minister Andrew Robb and Industry Minister Ian MacFarlane, Fairfax Media has spoken to at least two other cabinet ministers who strongly oppose the probe.
Mr Abbott said if an inquiry went ahead, he would not allow it to become a "one-sided inquiry which degenerates into a witch-hunt against some of our best companies".
"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.
Mr MacFarlane insisting five times on Tuesday that no final decision had been made on whether to proceed with an inquiry and added that he had spoken "pretty regularly" to the Prime Minister in the past two days about the matter.
Fortescue Metals Group chair Andrew Forrest has led calls for the inquiry and claimed BHP Billiton and Rio Tinto have flooded the market with cheap iron ore 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".
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.
Despite Mr Abbott distancing himself from Senator Xenophon's push for an inquiry, Joe Hockey has met with the South Australian senator to discuss the terms of reference and ensure it was "made up of sensible people", as the Treasurer put it.
Mr Hockey and Senator Xenophon discussed a joint House-Senate inquiry, which would be led by a Liberal MP such as Angus Taylor, a move designed to steer the process away from being focused on the big miners Rio Tinto and BHP and instead look at increasing flexibility and lowering costs for the industry.
The precipitous fall in the iron ore price has smashed federal government revenue and put pressure on Fortescue and other smaller mining companies.
Senator Xenophon said late on Tuesday he had sought an inquiry to examine the $18 billion impact on the budget of falling iron ore revenue and that he had initially been "encouraged by the statements of the Treasurer and Prime Minister".
The concerns raised by Mr Forrest also needed to be dealt with, he said, but "BHP and Rio and others have put up a campaign that verges on the hysterical".
Opposition Leader Bill Shorten warned such the inquiry could create sovereign risk and said the federal government should release the terms of reference.
He said the government was in a "world of pain on this iron ore inquiry because they are sending out mixed messages" and highlighted apparent divisions in the cabinet over the issue.
In a statement, Mr Forrest said the inquiry was essential because the price of iron ore had crashed in the past six months, leading to thousands of job losses and company closures.
Minerals Council of Australia chief executive Brendan Pearson said Mr Forrest's claims "have been exposed as more and more dubious the longer this debate has run".
"It is simply untrue to claim that somehow Rio Tinto and BHP Billiton set the global iron ore price," he said.
With Melanie Kembrey
