Storms shut Australian iron ore ports, stop zinc shipments

SYDNEY Tue Jan 22, 2013 4:44am EST

SYDNEY (Reuters) - A tropical storm intensifying off Australia's northwest coast brought nearly half the world's iron ore trade to a halt on Tuesday, idling huge ports used by miners Rio Tinto and BHP Billiton.

Port Hedland, Dampier and Cape Lambert ports were in the process of closing on Tuesday as the tropical storm gathered strength in the Indian Ocean, sending dozens of vessels in search of safe harbors.

Port Hedland is used by BHP Billiton, Fortescue Metals Group and Atlas Iron which expect to ship more than 200 million tons of ore this year, accounting for a fifth of global sea-borne trade in the steel-making raw material.

It will close at 1900 local time (1100 GMT), the Port Hedland Port authority said in a statement.

Rio Tinto, which ships more than 200 million tons of iron ore through Dampier and Cape Lambert, is also due to shut down port operations, the company said.

"Harbor masters are expected to close Port Walcott (Cape Lambert) and Dampier ports later today to allow ships to move outside of the system area," Rio Tinto said in a statement.

"Operations are continuing at this stage, but preparations are commencing to secure port and associated coastal infrastructure ahead of expected deteriorating conditions this evening," it said.

At 0600 GMT, a tropical low was estimated to be 130 km (80 miles) northeast of Port Hedland moving west at a speed of 11 kph, according to the Australian Bureau of Meteorology.

Iron ore prices have gained support from concerns that Australia's cyclone season, which runs from November until April, will reduce supplies.

Most of the iron ore mined in Australia is contracted by Chinese steel mills, with Japanese and South Korean mills also big buyers.

The last of the ships anchored within Port Hedland's inner harbor set sail by 0730 GMT, according to the port authority. Thirty-five ships anchored further out to sea left for safer areas earlier on Tuesday.

Total iron ore shipments from Port Hedland in December reached a monthly record 26 million tons.

The region between Port Hedland and Dampier is known among mariners as "cyclone alley", with at least half a dozen cyclones hitting from November to April each season.

The current storm is forecast to intensify to a Category 1 cyclone -- the weakest on a scale of one to five -- early on Wednesday. Gales of up to 100 kph (60 mph) could develop between Pardoo and Dampier, the Australian Bureau of Meteorology said.

BRACING FOR THE STORM

Oil and gas producers in the area were also bracing for the storm. Apache Energy said it had suspended operations at the Stag and Van Gogh oil fields due to the cyclone threat.

"The Stag and Van Gogh fields are shut in due to the expected path of the tropical low," the company said. "All other Apache fields will be operating as normal."

The Stag field is located in 161 feet of water 60 km (37 miles) off Dampier. Apache is the operator of the Stag field and has a 33.3 percent stake. Santos has the remaining 66.7 percent.

Apache also holds a 52.5 percent interest in the Van Gogh field, with Inpex owning the rest.

A separate tropical storm in Australia's remote northeast briefly reached cyclone strength and forced China's MMG Ltd to temporarily halt shipments of zinc concentrate from its Century mine, the second-largest zinc mine in the world.

The storm crossed the Queensland state coast with heavy rain and wind gusts of up to 100 kph (60 mph). It is forecast to move further inland before tracking south on Wednesday.

MMG has also restricted zinc processing at its mine, located about 300 km (185 miles) from the port of Karumba, it said, but expected to resume shipping on Wednesday if the weather eased. The Century mine has a production capacity of 500,000 tons.

(Additional reporting by Rebekah Kebede in PERTH; Editing by Miral Fahmy)

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