Mining giant Rio Tinto is concerned what signal a Senate inquiry into iron ore prices would send to the rest of the world.
But Prime Minister Tony Abbott insists that while there are all sorts of claims floating around, his government is not about to interfere with free markets, such as iron ore.
"We are not in the business of holding them back," Mr Abbott told reporters in Perth on Sunday. "We are not in the business of holding their hands... this government will never do that."
Independent Senator Nick Xenophon intends to move a motion in the Senate to look at the volatility in iron ore prices, which has caused havoc for both federal and state revenues.
Shadow treasurer Chris Bowen said Labor would co-operate with an inquiry, but Treasurer Joe Hockey has yet to make a final decision on whether he supports a review.
"I have spoken to all the players here and overseas and we will be making a final decision about whether we would proceed with something that is sensible and made up of sensible people over the next few weeks," Mr Hockey told ABC television.
Rio Tinto's chief executive for iron ore Andrew Harding says an inquiry would show the market is operating freely, openly and normally as the chairman of the Australian Competition and Consumer Commission Rod Sims and other competition experts have already identified.
"Australia must be mindful of the signal an inquiry would send to our major trading partners," Mr Harding said in a statement.
He said Australia's economic development has been underpinned by being a global champion of free trade and open markets and it should be careful not to disturb this hard-earned reputation.
"Our global standing as a supporter of open markets has already been undermined by calls to cap iron ore production and for government intervention in the market," he said in reference to recent comments by Fortescue Metals founder Andrew Forrest.
Mr Abbott also said an inquiry "could make sense" as it would "get to the bottom on claim and counter claim about what's happening inside the iron ore industry at the moment".
"... but what we don't want is a witch-hunt against any particular business," he told reporters in Townsville late on Sunday.
"I'm full of admiration for what companies like Rio and BHP have done ... I want them to continue to flourish, but I also want a level playing field, I want to ensure that there's no predatory behaviour, I want to ensure that everyone is able to compete freely in an open market."
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