Australia's first cyclone of season forms off western coast

Tue Jan 8, 2013 7:16pm EST

* Cyclone Narelle first for Dec-April tropical storm season

* Not likely to affect coastal areas for at least two days

* Iron ore price climbs on concerns of shipping delays over season

SYDNEY, Jan 9 (Reuters) - Australia's first cyclone of the storm season has developed off the country's northwest, but is not expected to affect coastal areas for at least 48 hours as it intensifies, the Australian Bureau of Meteorology said on Wednesday.

Warming waters off Australia are prone to lead to cyclones between December and April, potentially causing disruptions to iron ore mining and oil production.

Port Hedland on the northern Pilbara coast is used by BHP Billiton , Fortescue Metals Group Ltd and Atlas Iron to ship hundreds of millions of tonnes of ore annually.

The nearby ports of Dampier and Cape Lambert are used by Rio Tinto , which last year shipped more than 200 million tonnes of iron ore.

Cyclone Narelle was packing winds of up to 164 kms an hour (100 miles an hour), but winds of up to 279 kms per hour were expected by Friday as the storm makes its way to south to within 400 km of Port Hedland, according to the Bureau of Meteorology.

Wind speeds are calculated using the Bureau of Meteorology's system categorising a cyclone's intensity on a scale of one to five.

Port officials at Dampier and Port Hedland said the storm's progress was being closely monitored.

Iron ore was last quoted at $158.50 a tonne .IO62-CNI=SI, the highest price since Oct 14, 2011, in part on brisk buying by Asian steel mills ahead of any delays to shipments from Australia caused by cyclones.

Last March, Cyclone Lua halted production of about a quarter of Australia's daily oil production of about 390,000 barrels as companies were forced to suspend offshore drilling and evacuate staff. (Reporting by James Regan; Editing by Richard Pullin)

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