A new mining tax debate appears to be brewing as Australia's giant miners insisted before the Senate select committee that all state and territory royalties should be creditable against the minerals resources rent tax liability.

Brandishing an agreement forged with Prime Minister Julia Gillard, the miners told the committee on scrutiny of new taxes that it was their understanding that all royalties would be credited back to them.

Yet recent indications floated by Resources Minister Martin Ferguson seemed to belie the earlier deal struck by the government with the country's major mining firms as he stressed that the federal government is not committed to credit back future royalties.

The miners countered that it was their understanding that the mining deal covers all royalties, meaning current and future state royalties must be duly credited as stipulated in the original agreement.

BHP Billiton fiscal stability project manager Gerard Bond argued before the Senate that "the 'all' is essential for the MRRT to set a maximum rate of tax on the earnings of the iron ore and coal operations, which combined with the proposed company tax rate, is approximately 45 per cent."

Bond also stressed that the government's deliberate deviation from the original agreement "would undermine a critical design feature of the MRRT."

The mining firms had hoped that the federal government would honour the pre-election mining deal but two months after national election in August, Ms Gillard declared that she was weighing heavily against the idea of funding millions in refundable tax credits and possibly more if state royalties see dramatic spikes in light of the expected mining expansion.

Still, the miners are adamant that the deal must be honoured as originally agreed as Rio Tinto advised the Senate select committee that without the royalty guarantee from the government the company would have hold back on the more than $7 billion new investments it announced this year.

The government, however, is not tied down to follow the heads of agreement to the letter and it is empowered to tweak the final form of the MRRT legislation according to its liking yet analysts cautioned that doing so would unnecessarily lead to renewed hostilities between the mining firms and federal authorities.

The last war waged by the two quarters resulted to the change of leadership in Australia, in which then Prime Minister Kevin Rudd was forced to step down as giant mining companies lobbied hard for his removal, which analysts said was motivated by the mining tax dispute.