The Minerals Council is warning that "all bets would be off" if there were further changes to the mining tax, amid growing pressure on the Government from the Greens and within Labor ranks to overhaul the policy.
The council has taken out full-page newspaper advertisements arguing the industry already pays its fair share of tax through royalties and company tax.
"Enough is enough in relation to the obsession with increasing taxes on mining in Australia," the ad states.
Council chief executive Mitch Hooke says the industry pays about $20 billion a year in taxes and royalties, and has warned the Government against backing away from the agreement it signed with the country's three biggest miners.
"We would feel betrayed [if there were changes].
The deal would be compromised.
All bets would be off," Mr Hooke told ABC News.
"We have an agreement, we've stuck to the agreement, we've worked through the design parameters, we've stuck to that, we've committed to that.
"We'll work with the government of the day, but don't tinker with this." Labor backbencher Graham Perrett has responded to the newspaper ads, declaring: "Bring it on." "The harder fought, the better won as far as I'm concerned," he said.
"I'm happy to talk about Australian people's right to have fair return on the minerals that they earn, and I'm happy for Mitch Hooke to do what he's paid to do by the mining companies." Greens deputy leader Adam Bandt says Labor needs to have the "guts" to withstand the pressure from the Minerals Council.
"The Government needs to stand up to the big miners, who've got a lot of money and a lot of political clout," he told reporters in Canberra.
'Untidy, inefficient and unsustainable' Under the minerals resource rent tax (MRRT), state royalty charges are refundable to mining companies, meaning state governments have been given an incentive to increase the charges.
The Greens have repeatedly called on the Government to plug the revenue hole, and now some Labor MPs have begun to speak out in support of the idea.
"The arrangement with the states with respect to royalties is untidy, inefficient and I think unsustainable," chief Government Whip Joel Fitzgibbon told Parliament, adding that the tax was "unquestionably" a good thing.
"Review and reform will be necessary with respect to this taxation regime." Fellow Labor MP Stephen Jones agrees that the MRRT should remain in place, but is arguing for changes to how state royalties are dealt with.
"The existing arrangements with state government royalties effectively mean that there is a blank cheque to state governments to increase their royalties without any political pain because the Commonwealth picks up the tab for it.Â That's not sustainable," he said.
Julia Gillard, along with Treasurer Wayne Swan, renegotiated the mining tax with BHP Billiton, Rio Tinto and Xstrata soon after replacing Kevin Rudd as prime minister.
Mr Rudd yesterday said it was up to Ms Gillard and Mr Swan to explain why the tax had not raised revenue of any significance, suggesting that it would depend on what undertakings the pair made to the mining companies.
Ms Gillard says the Government has no plans to change the design of the tax, but instead pointed to negotiations between federal and state officials over how to deal with the issue of mining royalties.
New South Treasurer Mike Baird says he is prepared to talk with the Commonwealth about potential changes.
"I accept that at the moment, it's not working," he told ABC Radio National.
"There needs to be a broad discussion about what is the total pool that comes on the back of these (resources) and how do you distribute it.
"I'm open to that approach, but I'm not going to a position where the states either forcibly cap a tax, which means you've got no flexibility going forward, or we give up our right to tax."Â 'Fundamental flaw' The tax raised just $126 million during the first six months.
When the 2012-13 budget was handed down last year, the Government was predicting it would raise $3 billion this financial year.
Treasurer Wayne Swan has blamed the shortfall on a "dramatic collapse" in commodity prices.
But Independent MP Andrew Wilkie believes the Government is being dishonest about the true reason for the revenue shortfall.
"The fact is that the fundamental flaw - and there are a number of flaws - but the fundamental, the key flaw, are the depreciation provisions," he told AM.
Under the MRRT, companies are able to write-off the long term value of their assets against their mining tax bill.
According to a Fairfax newspaper report, Rio Tinto and BHP Billiton have built up a $1.7 billion arsenal of tax credits.
"Either the Government needs to fix those depreciation provisions and get the tax back, on track or it needs to get rid of the tax and start afresh," Mr Wilkie said.
In 2011, the head of Fortescue Metals Group Andrew Forrest warned of the problem.
"The great, big companies have...
hundreds of billions of dollars between them depreciation advantage, which means they can depreciate their assets by hundreds of billions of dollars before they pay this tax," Mr Forrest said at the time.
Mr Wilkie believes the Government owes Mr Forrest an apology.
"I must admit at the time I was sorely tempted to go with his line of thinking.
Instead I decided to trust the Treasury and the Government," he said.
"But he's been proven completely right.
I've as much as apologised publicly to him and I think the Government should do the same."