WA iron ore companies have joined forces with Andrew Forrest amid claims mining giants BHP Billiton and Rio Tinto are flooding world markets in a bid to kill off smaller rivals.
But the growing push for intervention in the iron ore market has caused a damaging split in the Federal Government, with senior ministers warning a likely parliamentary inquiry will spook international markets and damage relations with China.
Mid-sized WA miners Atlas Iron and BC Iron yesterday joined Mr Forrest's campaign against rising ore production by BHP and Rio, warning of huge damage to Australia's economy.
The plunging iron ore price is wreaking havoc on State and Federal budgets and causing job losses in the mining industry.
Former West Australian of the Year David Flanagan, whose company Atlas Iron has had a near-death experience because of the falling price of iron ore, led the new attack on BHP and Rio.
Mr Flanagan accused the mining giants of not acting in the best interests of taxpayers - who ultimately owned the iron ore - despite getting tens of billions of dollars in subsidies over the years that helped them build their operations.
He also described as "rubbish" claims by Rio and BHP that overseas competitors from South America or India would steal Australian markets if they did not increase production.
Stephen Pearce, chief financial officer of Mr Forrest's Fortescue Metals Group, left the door open to the State or Federal Government taking action against Rio and BHP if an inquiry warranted it, though he did not specify what could be done. He said the falling iron ore price was one of the biggest issues facing Australia.
"There is no other single issue that's wiped so many billions of dollars off Budget forecasts and people need to know why that's the case," he said.
Prime Minister Tony Abbott has backed calls for the inquiry and the Government is likely to form a joint House of Representatives and Senate committee for it.
But _The West Australian _understands Trade Minister Andrew Robb and Industry Minister Ian Macfarlane are flatly opposed to any probe in fear it could damage Australia's international reputation as a free-trade campaigner.
Australia is negotiating a free trade deal with China.
BC Iron chairman Tony Kiernan said the inquiry needed to acknowledge that iron ore was owned by the Australian people - not by mining companies.
"Secondly ... it's a depleting asset. Once dug up and sold, it won't be there," Mr Kiernan said.
"From the public's perspective, surely they should be able to get a fair price for the asset they own and which will not be replaced."
Rio Tinto Iron Ore chief executive Andrew Harding warned that Australia's global standing as a supporter of open markets was at stake.
"Australia must be mindful of the signal an inquiry would send," he said. "Australia has been a global champion of free trade and open markets. We should be careful not to disturb this hard-earned reputation."