A possible Senate inquiry into iron ore prices can't be a witchhunt, Prime Minister Tony Abbott has warned.
He also flagged government reluctance to regulate the sector, easing fears of the big miners and trade officials.
It was important to get to the facts given iron ore was one of Australia's "absolutely critical industries" with big effects on tax revenues, employment and investment, Mr Abbott told reporters in Mackay, Queensland, on Monday.
An inquiry might well be a very good way of doing that, he said.
"It is important to know what's happening in the iron ore sector - there are claims and counter claims being made at the moment."
The prime minister's comments follow calls for an inquiry on the back of iron ore prices halving since the 2014 budget, and claims mining giants Rio Tinto and BHP Billiton are oversupplying the market to squeeze out smaller operators.
"If we are going to have an inquiry, it's got to be a fair inquiry, it can't be a witchhunt, it can't be directed against any particular company or companies, it's got to be fair and square and reasonable," Mr Abbott said.
Trade Minister Andrew Robb won't say if he'll back an inquiry but says Australia should trust that the industry knows how to make a profit.
Mr Robb is said to be opposed to an inquiry but isn't giving anything away publicly, saying he's voiced his views to the coalition leadership, which is likely to make a decision next week.
Independent senator Nick Xenophon wants parliament to investigate the volatility in iron ore prices, which has caused havoc for both federal and state revenues.
Rio Tinto is concerned about what message an inquiry would send to the rest of the world.
Opposition Leader Bill Shorten accused the government of getting into a finger-pointing competition between mining companies.
"Mucking around" with the way iron ore was sold and dug up would send a message of instability to Asian customers, he told reporters in Melbourne.
The opposition would need to see the terms of reference before supporting an inquiry, he said.
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