By Matt Siegel and Sonali Paul
SYDNEY/MELBOURNE, May 15 (Reuters) - Australian Prime Minister Tony Abbott on Friday threw his support behind a proposed Senate inquiry into the economic impact of a slump in the price of iron ore, ratcheting up pressure on top producers Rio Tinto and BHP Billiton.
Leading independent senator Nick Xenophon on Thursday pulled a vote that could have launched an inquiry into the impact of the price collapse on government revenue and to consider whether action is needed to ensure healthy competition in the sector.
Xenophon postponed the vote to June 16 due to a lack of support in the upper house Senate. He now appears to have successfully garnered that support from Abbott.
"I think we do need an inquiry," Abbott said in an interview on Sydney's 2GB Radio.
"Certainly I think we do need to know the facts of what's going on here because I am conscious of the claims that are being made by Andrew Forrest and others."
The iron ore price slump has caused a A$20 billion ($16 billion) loss in government revenue in the past year and the fiscal 2016 budget released this week hinges on iron ore fetching at least $48 a tonne over the next year.
The iron ore price hit $46.70 a tonne in April, its lowest in a decade, although it has picked up to around $61 this week.
Top producers Rio Tinto and BHP have been flooding the market with iron ore, which has left smaller, high-cost producers struggling to survive.
Xenophon's call for a probe coincided with the opening of a new front in a campaign by billionaire Andrew "Twiggy" Forrest, founder of Fortescue Metals Group, Australia's no.3 iron ore producer, against bigger rivals Rio Tinto and BHP.
Fortescue has created a website called Our Iron Ore (www.ourironore.com), looking to drum up support for his war on Rio and BHP, the world's second- and third-largest iron ore producers respectively.
"Iron ore is Australia's most important single export earner and a dramatically falling price is putting significant pressure on current and future living standards of all Australians," the home page says.
It echoes what Forrest has repeatedly said this year, without naming BHP and Rio Tinto. "Multinational companies are failing to act in an economically rational way, choosing to oversupply the iron ore market in the medium term," it says.
The site urges the public to "join the campaign" by signing a petition, but a link does not lead to any petition so it is unclear what people would be putting their name to.
Rio and BHP declined comment on the website.
Although an inquiry is not the most effective use of the government's limited resources, it will help to shine a critical light on Forrest's claims, said Brendan Pearson, Chief Executive of national mining lobby the Minerals Council of Australia.
"A focus on facts rather than rhetoric will enable a rational consideration of the importance of free and open markets and the dangers of interventions in favour of selected producers," he said in a statement.
One crisis management expert said it would not pay for them to fuel the story by overreacting to Fortescue.
"There are two games being played here: one is the sort of vaudeville show at the front end but the more important one is going on behind the scenes," said Tim Allerton, managing director of Syndey-based City Public Relations, referring to lobbying on the matter in parliament.
Writing by Matt Siegel; Editing by Alan Raybould and Michael Perry