Kevin Rudd could have stayed on as prime minister, according to Fortescue Metals Group chair Andrew Forrest, who revealed Wednesday that the former Labor leader was working on acceptable revisions for the controversial resources super profits tax (RSPT).

In interviews he granted to both The Australian and The Australian Financial Review (AFR), Mr Forrest claimed that he and Mr Rudd had struck a deal to overhaul the RSPT and was ready to inform the public of the changes prior to his ouster as prime minister.

"When Rudd was rolled, he had the principles of a new and different tax sorted out," the AFR reported Mr Forrest as saying on Wednesday.

The deal, according to Mr Forrest, would significantly reduce FMG's RSPT obligation by 50 per cent as Mr Rudd allegedly dangled tax incentives for mining firms to ramp up investments on infrastructure projects that were related to their mining activities.

"We believed our proposal was an incredibly good deal for the country ... and a huge legacy for a Labor government," Mr orrest told The Australian as he talked of Mr Rudd's offer that would return some 20 per cent of the investments that FMG would inject on mining projects.

His negotiation with Mr Rudd started days before Prime Minister Julia Gillard launched her leadership challenge, Mr Forrest said, in which he tried to convince the Labor leader that the 40 per cent tax under the RSPT would lead to the demise of small mining firms.

Mr Rudd, however, was adamant on keeping the RSPT rate, leading the two parties to agree on the infrastructure concept compromise, with the Labor leader assuring then that the scheme will be approved by his cabinet.

But as it turned out, Ms Gillard successfully grabbed the Labor leadership on June 24, Mr Forest recalled, and the prime ministership as well, leaving Mr Rudd unable to unveil the agreement with FMG.

Mr Forrest conceded that his deal with Mr Rudd will not win the backing of giant mining firms such as BHP Billiton and Rio Tinto but "we didn't realise then that BHP and Rio had gone behind our backs to do another deal."

"We believed our proposal was an incredibly good deal for the country," Mr Forrest told The Australian in underscoring his belief that his agreement with Mr Rudd was far more superior from the one secured by Ms Gillard with BHP, Rio Tinto and Xstrata.

Mr Forrest's story, however, was labelled by Federal Treasurer Wayne Swan as bordering to the conspiracy theories that normally, he added, were attributed to mining billionaire Clive Palmer.

Mr Swan told ABC that he would respond to the claims voiced out by Mr Forrest lest he would inadvertently give credence to the story.

"(Forrest) is out there all of the time making all sorts of extraordinary claims and I don't intend to respond to them one by one," Mr Swan said.

Opposition Leader Tony Abbott, however, viewed Mr Forrest's claims as another taint to the crumbling reputation of Ms Gillard, who latest polls said has been regarded with dwindling trust by many Australians.

"Yet again essential elements of the prime minister's stories for what she has done are now unravelling ... and it calls in to question her explanations for (the leadership coup) against Kevin Rudd," Mr Abbott told The Australian on Wednesday.