This credit is worth $1.8 billion to the mining industry and offsets the excise the Australian government raises on the sale of diesel.

The government has already said it will claw back 6c a litre from the excise when its carbon tax comes in. That is worth $400 million.

Speculation is mounting the Federal Treasury – under pressure to ensure the government’s May budget delivers the promised surplus – is looking to claw back even more from the credit.

A spokesman for Treasurer Wayne Swan said: “There’ll be plenty of stories between now and the budget – many of which will be wrong.

“The government doesn’t intend to comment on any budget speculation except to say that the budget will continue our strong record of managing the economy in the interests of all Australians.”

However, various sources International Longwall News spoke to said there was a genuine concern that there was a credit cut coming.

A Minerals Council spokesman said the lobby group was talking to anybody it could think of to try and head this mooted tax off.

The council’s chief executive officer Mitch Hooke said the Fuel Tax Credit was not a “subsidy”

“It removes fuel excise as an impost on a critical business input – a policy which has had bipartisan support since the scheme was introduced,” he said.

“Miners, farmers and others pay the excess tax in the first place solely as a means of easing the administrative burden on government.

“In the context of fossil fuel subsidies, the Australian government has rightly held to the position that the fuel tax credit scheme is outside the scope of what is to be considered given that ‘the primary objective is to reduce the incidence of fuel tax on business inputs’

“Taxes on business inputs are especially inefficient and contrary to good tax policy principles, a point Treasury has held to strongly in the past whether in the context of fuel tax or broader reforms such as the GST.”

The Queensland Resources Council and New South Wales Minerals Council also have been railing against the speculated change.

The QRC has pinned its hopes on a productivity commission review that federal Resources Minister Martin Ferguson promised when addressing a QRC function last year.

A spokesman for the QRC said he hoped the productivity commission report would back up the council’s assertion that the credit was not a subsidy but really covering a cost of business.

NSW Minerals Council CEO Stephen Galilee said the federal government had to decide whether it wanted to encourage investment or stifle it.

“If the federal government is planning yet another tax increase it would be a shameless cash grab to prop up the budget and help deliver a misleading surplus,” he said.

“Direct mining jobs in NSW have grown by 107 per cent over the past four years to more than 45,000. It defies believe the federal government would want to stunt that growth when jobs are being lost in other parts of the economy.

“The list of new taxes and charges on NSW mining is growing. Another diesel tax increase would come on top of the carbon tax, the mining tax and last year’s reduction in the diesel tax rebate – all in the last 12 months.”