Cyclone Rusty forces Pilbara shutdown
CYCLONE RUSTY, which has already caused destructive winds and dangerous flooding in the Pilbara, is expected to have a significant impact on mining companies operating in the area, with about $500 million in iron ore exports already halted.
The category three cyclone, which was expected to cross the coast late on Wednesday night, is large and slow-moving, meaning the bad weather could hang around for longer than usual and bring a lot of rain, causing further flooding.
Any interruption in the activity reduces production and therefore profit margins.
The iron ore industry in the region is worth $50 billion in exports each year.
Rio Tinto said it had prepared for the storm by closing the Port Walcott port at Cape Lambert and had finish ship-loading at its Dampier ports.
Port Hedland, used by BHP Billiton and Fortescue Metals Group officially closed early on Monday as the last vessel cleared the shipping channel.
A professor of mining geology from the University of Adelaide, Ian Plimer, said mining and resources companies planned for such incidents and interruptions in output were taken into account annually.
"All the iron ore companies cater for a cyclone season in terms of production and what it does to their production," he said.
"They have cyclone-proofing mechanisms at each of the mines."
The chief executive of the West Australian Chamber of Minerals and Energy, Reg Howard-Smith, said worker safety was of primary concern.
"The Pilbara region is of great economic importance to the WA and national economies," Mr Howard-Smith said. "Unfortunately, the region also has plenty of cyclone activity.
"Residents and particularly resource sector companies operating in the region are well-drilled in how to prepare for these events.
The Dampier port deals with a variety of cargo including supplies for offshore oil and gas facilities, construction materials and pre-fabricated modules for large liquefied natural gas projects, smaller fabricated steel structures, rail equipment for the mining industry and supplies for local construction projects.
Last financial year, more than 85 per cent of exports were iron ore and almost 10 per cent were liquefied natural gas.
According to the port's website, it experiences an average of three cyclones a year
Iron ore prices recently hit a one-month low of US$151.90 a tonne. However supply disruptions linked to Rusty were expected to support prices, analysts said.