* Tugboat workers back strike plan at huge iron ore port
* Strike would cripple half of Australia's iron ore exports
* Iron ore is Australia's top export earner
* Coal sector also faces dispute
(Recasts, adds iron ore trader, coal dispute )
By Sonali Paul
MELBOURNE, May 12 Tugboat workers at Australia's
main iron ore port threaten to hold a strike that could halt a
quarter of the world's iron ore exports and cost miners $100
million a day, just as the industry battles to slash costs and
get more out of its workers.
The dispute comes as resource firms say Australia has become
far more expensive than other locations as a now maturing
project construction boom, driven by Chinese demand, led to fat
pay packets and lavish conditions.
In some outback mines, for example, workers are flown back
and forth from resort-like housing, while cooks and laundry
hands at some gas projects can earn as much as A$350,000
Tugboat deckhands at Port Hedland, used by Australia's
second- and third-largest iron ore producers, on Monday approved
a plan to go on strike for one, two or seven days if they are
unable to resolve a dispute over vacation and pay.
A disruption in shipments from BHP Billiton
and Fortescue Metals Group may help prop up iron ore
prices that have lost 14 percent from April highs, although
bigger rivals Rio Tinto and Brazil's Vale
could fill any short-term gap in a well supplied market.
The Maritime Union of Australia (MUA), representing
deckhands, said it remained in talks with tugboat operator
Teekay Shipping Australia to resolve the dispute, and no
decision had been made yet on whether to strike.
Deckhands, who work four-weeks-on and four-weeks-off for
A$135,000 a year, want four weeks of annual leave on top of
that. They say that is less than the industry standard of six
weeks annual leave for workers who are on a similar roster.
"We think this is very reasonable, given our members work 12
hours a day for 28 days straight in very tough conditions," said
Will Tracey, Assistant Western Australia secretary of the MUA.
They are also seeking pay rates of 70 percent of the
A$220,000 that tugboat masters earn, which they say would match
the gap between deckhands and masters at other Australian ports.
ECONOMY HOSTAGE TO DISPUTE
Iron ore is Australia's biggest export earner, with the
value of exports forecast to surge 35 percent to A$76.8 billion
in the year to June 2014 from a year earlier, according to the
Bureau of Resources and Energy Economics.
"Given the current wages and conditions, we think it would
be irresponsible for the MUA to take industrial action that
would put a stop to one of Australia's most critical national
exports," a BHP Billiton spokeswoman said.
BHP, which holds the licence for the tugboats at Port
Hedland, estimated a strike would cost suppliers who use the
port around $100 million a day, based on exports running at
around 1.1 million tonnes a day at a price of $103 a tonne.
If the workers decide to go on strike, they must do so
within 30 days, and must give Teekay three days' notice ahead of
any strike. Further mediation is due on May 20.
Masters and engineers who also work on the tugboats are due
to hold similar votes, with the results due on May 30 and June
10, which could escalate potential strike action.
BHP said it remained hopeful that Teekay would be able to
reach an agreement with the maritime unions. Teekay declined to
comment, pointing to further mediation.
Australia's biggest iron ore producer, Rio Tinto, would not
be hit by a strike at Port Hedland as it does not use the port.
But one analyst, who declined to be named, said the huge
importance of iron ore exports to the economy meant the
government could intervene in the event of industrial action.
Iron ore futures in Singapore gained almost 1
percent after news of the union vote. Dalian iron ore futures
rose 0.7 percent.
"It depends on how long the strike lasts. If it lasts for a
week or even longer this will provide a strong support to iron
ore prices," said an iron ore trader in Shanghai.
Spot iron ore .IO62-CNI=SI stood at $102.70 a tonne on
Friday, the lowest since September 2012.
The MUA vote came on the same day as Australia's top coal
transporter, Aurizon Holdings Ltd, said it was seeking
to terminate 14 union agreements, after saying it had been
pressing for more than a year to get workers to be more flexible
over rostering, remove terms that block forced redundancies and
eliminate free rail travel.
"It's not only about money, it's about being flexible," said
Aurizon spokesman Mark Hairsine.
The dispute with Aurizon could eventually lead to strikes
affecting coal trains, hitting Australia's second-biggest export
($1 = 1.0697 Australian Dollars)
(Additional reporting by Manolo Serapio in SINGAPORE; Editing
by Ed Davies)