Townsville Enterprise has been accused of "zero sum thinking" for opposing a rail link from Mount Isa to Tennant Creek.
Citing an economic study showing the link had the potential to redirect a significant share of the North West Minerals Province's $4 billion of mineral exports to Darwin, TEL last week warned up to 900 jobs were at risk.
But Mount Isa Mayor Joyce McCulloch has backed the Tennant Creek rail proposal and said "there was a lot of zero sum thinking going on".
"The TEL report, by AEC, focused only on Townsville and not on the broader Northern Australia economy," Cr McCulloch said.
"An efficient rail connection linking Townsville on the east coast and Darwin in Australia's north will mean improved supply chains throughout Northern Australia which will be good for all economic centres, including Townsville.
"There is a lot of zero sum thinking going on at the moment with a belief that if one centre achieves something then that is to the detriment of another, and that is simply not the case."
TEL CEO Patricia O'Callaghan said the report clearly showed the potential for loss of wealth along the rail corridor and it was important for it to be raised.
"I think it's extremely disappointing that the mayor of Mount Isa would dismiss a report that shows there is the potential for up to 900 jobs lost from the region," Ms O'Callaghan said.
"It's common sense that if product is exported out through Darwin, it will affect this region. It's important for us to acknowledge that."
Cr McCulloch said the Tennant Creek rail line, linking with the Adelaide-Darwin line, would make the supply chains in Northern Australia more efficient, make companies more efficient and attract new investment and jobs.
She called on the Federal Government to release its Mount Isa and Tennant Creek Railway Strategic Options Paper.
"We understand there have been many expressions of interest in funding and building it," Cr McCulloch said.
Federal Infrastructure Minister Darren Chester said the Government was undertaking the options paper and technical assessment in partnership with Queensland and the Northern Territory.
"This work is being undertaken in the context of the Darwin to Townsville corridor and we expect the Technical Assessment Program will be finalised in early 2018," Mr Chester said.
"We will then review the outcomes of the work in order to consider any next steps."
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