GO
Loading...

Australian Cyclone Intensifies As It Approaches Iron Ore Belt

Thursday, 10 Jan 2013 | 8:57 AM ET
Fortescue Metals Group's Cloudbreak operation in the Pilbara region of Western Australia.
Bloomberg | Getty Images
Fortescue Metals Group's Cloudbreak operation in the Pilbara region of Western Australia.

A cyclone approaching Australia's northwest coast that forced miners to shut down key iron ore export terminals and offshore oilfields has intensified into a category four storm, the second-highest level, and will strengthen over the weekend.

The Bureau of Meteorology said wind gusts of 100 kilometers per hour (62 miles per hour) are expected to develop along the coastline on Friday, before strengthening to as much as 250 kilometers per hour (155 miles per hour) near the cyclone's center over the weekend.

(Read More: Australia Investment in New Mine Projects at Record High)

Cyclone Narelle is not expected to make landfall in Western Australia, but authorities warned residents in coastal towns it will still be extremely dangerous.

The first cyclone of the Australian season was some 515 km (320 miles) offshore of the coastal town of Karratha, an oil and mining services hub used by Woodside Petroleum, Apache, CITIC Pacific, Rio Tinto, Shell and others.

Woodside, Apache and BHP Billiton are disconnecting oil production vessels from offshore fields that contribute about a third of Australia's oil production of 390,000 barrels per day, sources with direct knowledge of the matter said.

Rio Tinto, the world's second-largest iron ore producer, has suspended ship loading at the ports of Dampier and Cape Lambert.

(Read More: Australia Trade Deficit Widens; Iron Ore to the Rescue)

Further along the coast, Port Hedland is used by BHP Billiton, Fortescue and Atlas Iron to ship hundreds of millions of tonnes of ore annually.

Companies including Chevron, which uses Karratha as a base for the $27 billion North West Shelf LNG project, are preparing to evacuate staff if the cyclone suddenly changes direction and speed, which is a common occurrence with such storms in the Pilbara iron belt.

Qantas Airways has scheduled extra flights to evacuate workers from drilling platforms and mining sites if necessary.

Read More: Australia's Port Hedland Ships 25 Percent More Iron Ore to China in December)

There are on average around seven cyclones a year in Western Australia between December and April.

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.

  Price   Change %Change
BHP
---
RIO
---
FMG
---
CVX
---
QAN
---
WPL
---
APA
---
267
---
RDSA
---