Australia's mining giants escalate war over iron ore 'cartel' claims

Australia's second largest mining company has hit back at claims by a competitor that it was " flooding the market" with iron ore to drive other companies out of business.

Rio Tinto chief executive Andrew Harding has said he was " stunned" at the strong public campaign against his company by rival CEO Andrew Forrest of Fortescue Metals Group.

"The reality is Australia has a great reputation internationally for its commitment to free and open trade," he told the Sydney Morning Herald on Tuesday.

This is the latest development in a string of disputes between three of Australia's biggest iron ore produces, after Forrest accused Rio Tinto and BHP Billiton of driving the competition broke by flooding the market with iron ore and therefore bringing down its price.

The base metal has slipped to as low as 50 U.S dollars per tonne in recent weeks, down from highs of 135 U.S dollars in 2013. Forrest has publicly urged the government to take action and called upon a parliamentary inquiry into the competition in the iron ore industry.

Rio Tinto was quick to dispel the claims on Tuesday, labeling them "baseless".

The company's managing director Phil Edmands told AAP that the company was happy to comply with an inquiry if one was to take place.

"The conduct allegations are baseless and are an area for the Australian Competition and Consumer Commission which has already said there's nothing in that," he said on Tuesday.

"We don't fear going before an inquiry to talk about it but how the inquiry is going to be seen externally as an inquiry into market intervention is the real point."

The campaign for an inquiry was backed by Finance Minister Mathias Cormann on Monday and independent Senator Nick Xenophon and even Prime Minister Tony Abbott, who said he was in favor of backing a "sensible inquiry" into the industry.

But Abbott said he was not bowing to Forrest's claims of conducting a "witch-hunt" against BHP and Rio Tinto.

Rio Tinto's CEO Harding cited market uncertainty as reasons for the drop in iron ore prices, which had rebounded in the last week to 60 U.S dollars per tonne.

The drastic price drop since 2013 has already pushed smaller miners such as Atlas Iron to the brink of bankruptcy, and has forced Fortescue Metals to refinance a portion of its debt. Endi