* Possible cyclone could approach Pilbara by Thurs
* Would be Australia's first cyclone this season
* Almost all Australia ore is mined in country's far west
SYDNEY, Jan 8 A cyclone is expected to develop
later on Tuesday off Australia's northwestern coast before
approaching the Pilbara iron ore mining region, weather
International prices paid for iron ore needed to make steel
have been climbing ahead of the start of the Australian and
Brazilian cyclone seasons, which typically run from November 30
to April 30, in part over concerns shipments could face delays.
A tropical low located south of the Lesser Sunda Islands was
expected to intensify as it moves in a generally southwest
direction at a speed of 13 km per hour, reaching cyclone
strength well north of the Australian mainland, according to the
Australian Bureau of Meteorology.
By Thursday the system may take a more south southwest track
and approach the west Pilbara coast, it said. The cyclone is
forecast to be packing winds of up to 224 kph by that time.
There have been no cyclones so far this season in Australia,
which along with Brazil accounts for about 70 percent of the
world's seaborne iron ore trade.
Benchmark iron ore with 62 percent iron content
.IO62-CNI=SI was last quoted at $153.90 a tonne, the highest
since mid-October 2011, according to Steel Index.
Almost all of Australia's ore is mined in the nation's far
west, a sparsely-populated expanse four times the size of Texas
serviced by only a handful of ports.
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.
Daniel Frost, harbour master for Port Dampier, said the
storm's progress was being monitored.
"We'll wait for future reports and take the necessary action
when needed," he said.
Last March, a cyclone also stopped production of about a
quarter of Australia's daily oil production of about 390,000
barrels. Chevron, Apache Corp, Woodside Petroleum
and Santos Corp suspended offshore drilling
and evacuated staff as Cyclone Lua approached.
(Reporting by James Regan; Editing by Joseph Radford)