Storm off Australia iron belt intensifies to cyclone strength

Reuters News
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Posted: Jan 21, 2013 11:36 PM

By James Regan

SYDNEY (Reuters) - A tropical low off Australia's northwest coast that brought nearly half the world's iron ore trade to a halt intensified to cyclone strength on Wednesday, keeping huge ports used by miners Rio Tinto and BHP Billiton idle.

Cyclone Peta has formed just off the Pilbara coast where the ports are located, generating 100-kph gales, the Australian Bureau of Meteorology said.

At 0400 GMT, the category 1 cyclone -- the weakest on a scale of one-to-five -- was tracking south of Port Hedland towards Cape Lambert and Dampier ports. By 1300 GMT, Peta is forecast to make landfall and weaken below cyclone strength, according to the Bureau of Meteorology.

Port Hedland, which closed on Tuesday evening, is used by BHP Billiton, Fortescue Metals Group and Atlas Iron to ship iron ore cargoes which this year are expected to exceed 200 million tons, accounting for a fifth of the global sea-borne trade in the steel-making raw material.

Rio Tinto, which ships more than 200 million tons of iron ore through Dampier and Cape Lambert, also shut operations.

CYCLONE ALLEY

Weather models indicate Cyclone Peta may go back over the ocean after it makes landfall, but is not expected to intensify.

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.

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.

Apache Energy said it had suspended operations at the Stag and Van Gogh oil fields due to the cyclone threat.

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.

(Additional reporting by Rebekah Kebede in PERTH and Jane Wardell in SYDNEY; Editing by Miral Fahmy and Lincoln Feast)


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