Cyclone gathers strength off Australia's west coast

SYDNEY Wed Jan 9, 2013 11:23pm EST

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SYDNEY (Reuters) - Australia's first cyclone of the storm season is intensifying off the country's northwest and is expected to disrupt coastal areas in mining powerhouse Western Australia state as soon as Friday, the Australian Bureau of Meteorology said.

Fortescue Metals Group, Australia's third-largest iron ore miner, said on Thursday its mines and port operations were running as usual but it was monitoring the progress of Cyclone Narelle as it bore down on Australia's west coast.

"Operations are continuing throughout the business as usual," Fortescue said in a statement emailed to Reuters.

Fortescue and other mining companies with operations in the Pilbara iron belt, including Rio Tinto and BHP Billiton, each adhere to strict procedures for keeping tabs on approaching cyclones. There are on average around seven cyclones a year in Western Australia.

"We are also reviewing our tie-down plans and preparing further plans if the cyclone suddenly changes direction and speed," Fortescue said.

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

Cyclone Narelle, now a category three storm, was expected to gather strength and possibly be upgraded to a category four cyclone by Thursday afternoon.

The storm was moving southwest towards Australia's Pilbara coast, with winds in its centre of up to 195 kph (120 mph), according to the Bureau of Meteorology, potentially causing disruptions to iron ore mining and oil production.

At 0340 GMT, Narelle was located 760 km (470 miles) north of the coastal town of Karratha, an oil and mining services hub used by Woodside Petroleum, Apache Corp, CITIC Pacific, Rio Tinto and others.

PRECAUTIONS

Warming waters off Australia can lead to cyclones between December and April. Cyclones interrupted mining operations last January.

Port Hedland on the northern Pilbara coast is used by BHP Billiton, Fortescue 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.

Port officials at Dampier and Port Hedland said the storm's progress was being monitored closely. At Dampier, authorities expected facilities to be shut down and ships to leave the port later on Thursday.

Karratha is also a base for the $27 billion North West Shelf LNG project owned by Chevron Energy, Shell and Woodside Petroleum, as well as other oil and gas ventures.

Woodside said it was taking precautions to keep employees and facilities safe but would only comment on any change to its operations if there was a "material" affect on production.

Last March, Cyclone Lua halted output of about a quarter of Australia's daily oil production of 390,000 barrels as companies were forced to suspend offshore drilling and evacuate staff.

Wind speeds are calculated using a system categorizing a cyclone's intensity on a scale of one to five.

(Additional reporting by Rob Taylor in CANBERRA and Rebekah Kebede in PERTH; Editing by Paul Tait)

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