CORRECTED-Australia's top iron ore port braces for direct cyclone hit

Mon Feb 25, 2013 8:56pm EST

(Corrects name to Brinsden in paragraphs 4 and 5)

SYDNEY Feb 26 (Reuters) - A powerful tropical cyclone is on course for a "direct hit" on Australia's Port Hedland, which handles a fifth of the world's seaborne-traded iron ore, with evacuations starting on Tuesday ahead of forecast 280 kph (175 mph) winds and torrential rains.

Cyclone Rusty, which is expected to reach Australia's northwest coast on Wednesday, has already closed Port Hedland, halting the loading of millions of tonnes of iron ore, and shut offshore oil and gas fields.

Rusty could strengthen to a category four storm -- on a scale of one-to five -- by the time its reaches the port, according to the Bureau of Meteorology tracking system.

"In this case a direct hit looks likely," said Atlas Iron Managing Director Ken Brinsden, adding the miner had halted its port operations and evacuated its employees from the area.

"That implies an impact on production," Brinsden said.

BHP Billiton , Fortescue Metals Group and Atlas are forecast to ship more than 275 million tonnes of iron ore this year, or 750,000 tonnes per day, through Port Hedland.

A weaker category one system which passed the Pilbara in January forced the shutdown of all three iron ore export terminals, contributing to a nine percent drop in exports for the month and a 5.2 rise in spot prices.

Australia's weather bureau said the cyclone intensity increased to a Category 3 overnight and put the storm at about 170 km (105 miles) north-northeast of Port Hedland.

The Department of Fire and Emergency Services warned residents in low lying areas of Port Hedland to evacuate.

"Rapid and powerful flooding is very likely as severe tropical Cyclone Rusty crosses the coast," it said

The ports of Dampier and Cape Lambert, about 200 km south of Port Hedland and used by Australia's biggest iron ore miner Rio Tinto , have also been closed as a precaution against the storm.

Rio Tinto is targeting shipments of 260 million tonnes of ore through these ports this year.

Iron ore prices .IO62-CNI=SIP have pulled back to just under $152 a tonne since hitting a 16-month peak of $158.90 last Wednesday. (Reporting by James Regan; Editing by Michael Perry)