Cyclone Heidi Shuts Australian Iron Ore Ports, Oil Fields

By and Rebekah Kebede | January 11, 2012

A tropical cyclone bearing down on Western Australia forced the closure of some of the world’s largest iron ore ports and several offshore oil fields on Wednesday, the first major series of shutdowns in what is forecast to be a tempestuous summer.

Ports serving the enormous iron ore mines of northwest Australia began closing on Tuesday night as Cyclone Heidi, packing winds of more than 100 kph (60 mph), swept across the Indian Ocean toward a stretch of coast where nearly two-thirds of the world’s seaborne-traded iron ore is handled.

Cyclones are a normal feature of Australian summers but the national weather forecaster is predicting a better-than-even chance of more than seven such storms this season.

Port Hedland, the region’s largest iron ore port, exporting around 240 million tons of the steel-making commodity a year, is closed to traffic until the storm passes and any damage is assessed, deputy harbor master Adrian Olsen said on Wednesday.

Australia’s second and third biggest iron ore miners, BHP Billiton and Fortescue Metals Group, both export through Port Hedland, which lies directly in the path of the cyclone, forecast to hit the coast late on Wednesday night.

Australia’s biggest iron ore miner and the world’s second-largest, Rio Tinto, said it had also halted all loading at Dampier and Cape Lambert ports, south of Port Hedland.

Rio Tinto ships around 225 million tons a year from these two ports, which are also in the projected path of the cyclone.

Fortescue exports about 55 million tons a year, while BHP Billiton ships around 155 million tons.

Australia’s largest oil and gas firm, Woodside Petroleum, also took precautions against the onset of Cyclone Heidi, shutting production from several offshore fields.

“In response to Tropical Cyclone Heidi, Woodside has shut-in production from the Cossack, Wanaea, Lambert and Hermes oil fields on the North West Shelf and the Vincent oil field off the North West Cape,” Woodside said in an emailed statement.

Heidi is rated a category-one cyclone, the lowest ranking on a scale of one to five, but could intensify to a category two before it hits the coast, which could mean winds picking up to destructive speeds of around 160 kph.

The cyclone is already causing heavy rains further inland in the Pilbara mining belt, the country’s richest iron ore region, with downpours of up to 100 mm (3.9 inches) seen as possible. The Pilbara mines, though, are all still running.

The bureau warned in October the region was facing a 65 percent chance of being hit by more than seven cyclones during the November to April tropical storm season.

Tropical cyclones and temporary shutdowns are a normal part of Australian summers, but an especially stormy season can have major impacts, such as when cyclones and flooding swamped the coal-mining industry in the country’s northeast a year ago.

“Cyclones are typical at this time of year. If it’s fairly minimal, then they’ll be back on track in 48 hours or so, but if it repeats then obviously we’re talking about a different scenario, but we’ll have to wait and see,” said Rory MacDonald, iron ore broker at Freight Investor Services.

Spot iron ore prices rose 1.6 percent to a seven-week high of $142.30 a ton on Tuesday as Chinese steel producers boosted stockpiles ahead of a week-long Lunar New Year break in late January.

But overall demand is still generally lackluster, and the spot price remains 26 percent down from its 2011 peak of $191.90 reached in mid-February last year.

(Additional reporting by Ed Davies in SYDNEY and Manolo Serapio Jr in SINGAPORE; Editing by Lincoln Feast and Mark Bendeich)

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