Federal Agriculture Minister Barnaby Joyce's decision to oppose a Chinese-backed coal mine and defy the principle of "cabinet solidarity" has reignited debate about whether he has the credentials to become deputy prime minister.

Environment Minister Greg Hunt gave conditional approval to the Shenhua Watermark project in northern New South Wales last week.

Since then, Mr Joyce has argued strongly against it but said his concerns stemmed from his position as agriculture minister, not because the project was in his electorate.

The ABC has spoken to a number of Nationals MPs who believe it is damaging his standing internally.

Liberals said it was further evidence he should not succeed Warren Truss as the country party's leader.

"[It's about] cabinet solidarity ... at that level of the Government you have to play by the rules," one Liberal said.

The senator said the Chinese had raised concerns at the highest levels of government about the possibility Mr Joyce would one day succeed Mr Truss, and follow in the footsteps of Nationals leaders who have also taken on the trade portfolio.

"There is tremendous angst among the Chinese that he could become deputy prime minister and trade minister," the senator said.

When asked if this was because Mr Joyce was seen as xenophobic, the senator said, "exactly".

Mr Joyce has long battled against the so-called economic dries in the Liberal Party who see his approach to trade as "interventionist" and in conflict with their free market agendas.

The Australian newspaper reported on Monday that Shenhua project manager Peter Jackson had also called Mr Joyce xenophobic.

Mr Joyce said Mr Jackson's comments were "very unfortunate".

"I think you have to be very careful about what you say about other people, especially in public office, especially when they're incorrect," he said.

"It's so absurd, I mean my brother-in-law's Chinese, my sister-in-law's Chinese."

The eastern, southern and western mining areas in the Watermark coal project. They will be progressively mined and rehabilitated over the 30 year life of the project. ( Supplied: Shenhua )

Opposition to mine raises questions

Mr Joyce's opposition to the Shenhua mine has raised questions about his relationship with Prime Minister Tony Abbott; who, according to Coalition sources, sidelined him during the rollout of the recent agriculture whitepaper and ordered him not to go on the ABC's Q&A program.

"My impression is Tony can't stand the bloke," a Lower House Liberal said.

Key facts: Shenhua's coal mine The open-cut coal project is valued at $1.2 billion

The open-cut coal project is valued at $1.2 billion 10 million tonnes of coal will be extracted a year

10 million tonnes of coal will be extracted a year The mine has a 30-year life, with extraction expected to end in 2046

The mine has a 30-year life, with extraction expected to end in 2046 159 million tonnes of coal will be mined over 30 years

159 million tonnes of coal will be mined over 30 years The project is 280km by rail from the Port of Newcastle, from where the coal will be exported

The project is 280km by rail from the Port of Newcastle, from where the coal will be exported Mining operations will run 24 hours a day, seven days a week

Mining operations will run 24 hours a day, seven days a week There will be five blast events a week once mining operations are established

There will be five blast events a week once mining operations are established The project is expected to employ 600 construction staff and another 400 to run the mine Source: NSW Planning and Environment and Shenhua Watermark

"I think the PM is dreadfully worried about Barnaby as deputy PM because he's a loose cannon.

"Tony has no problems leaving Warren in charge [as acting prime minister when he's overseas] — I don't think he'd say the same about Barnaby."

However, Mr Abbott has said publicly he respects Mr Joyce's "passion and commitment" as both a local member and minister and has praised Mr Joyce's work on the Agriculture White Paper as "outstanding".

A spokesman for the Prime Minister said Mr Abbott and Mr Joyce have an excellent working and personal relationship and to suggest otherwise is completely false.

There are MPs within both the Liberal and Nationals camps that believe Mr Abbott wants Mr Truss to stay on for another term to allow an alternative Nationals leader to Mr Joyce to emerge.

Some believe Labor would run election ads asking people if they really want Mr Joyce to be acting prime minister, if he took over from Mr Truss.

In particular they feared the double billing of Mr Joyce as deputy prime minister and Mr Abbott as prime minister would be tough to sell to voters.

When asked about Mr Joyce's leadership credentials on Tuesday, Treasurer Joe Hockey described him as an "outstanding" deputy leader of the National Party.

"Sometimes I don't agree with him, often I do agree with him, [but] you know what I love about him? He puts Australia first," he said.

Nationals senator Matt Canavan has dismissed internal criticism of his colleague, saying he is clearly someone who has been marked as a potential future leader.

"That's exactly what people hate, people like people who have a backbone and are up-front and tell people what they think," Senator Canavan said.

"They hate people who go behind people's backs ... and like to sneak around in the darkness and think they're Machiavellian."

Truss to announce whether he will stand again closer to election

For his part, Mr Joyce said Mr Truss "will remain the leader for as long as possible".

"I've always said that my role as deputy is to be loyal to the leader, this is not like [the ABC series] The Killing Season in the National Party," Mr Joyce said.

He also said he did not think his opposition to the Shenhua mine had damaged his credentials as a potential replacement for Mr Truss.

The Nationals MPs viewed as alternative leaders to Mr Joyce, if Mr Truss stayed on for another term to give them time to build their leadership credentials, are Victorian Darren Chester and Riverina MP Michael McCormack.

Mr Truss battled illness last year and has said he would announce whether he would stand again closer to the election.

Queensland Nationals MP Ken O'Dowd said he thought there was a possibility Mr Truss would go at the end of this term.

"Everyone's got to hang up the boots at some stage ... so it's just a matter of wait and see," Mr O'Dowd said.

"Barnaby's got a lot of credentials, he could be leader very easily."

Mr O'Dowd also said he thought it was imperative the Prime Minister and Mr Joyce sat down and talk about the coal mine issue.

"Both are probably right, both are probably a little bit wrong but it's got to be sorted out," he said.

Fellow Queensland Nationals MP George Christensen said he thought Mr Joyce was "the natural successor to Warren Truss, when Warren Truss decides he's going".

"Ultimately that's a decision for Warren," he said.

"He will remain unchallenged as leader until the point he sees fit that it's time to get off the wombat trail, I suppose, and hang up the Akubra.

"I would assume that the mantle will pass to Barnaby and certainly that's what I would be pushing for in the event that Warren retired."