WA cyclone halts iron ore exports
The category three cyclone, which was expected to cross the coast late on Wednesday, is large and slow-moving, meaning the bad weather would hang around for longer than usual and bring a lot of rain, which would cause 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 per year.
Mining giant Rio Tinto said it had prepared for the storm by closing the Port Walcott port at Cape Lambert and had finished loading ships 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. Rio Tinto's Dampier and Cape Lambert ports, about 200 kilometres south of Port Hedland, have also begun to close operations.
The professor of mining geology at the University of Adelaide, Ian Plimer, said mining and resources companies planned for such incidents and interruptions in output were taken into account on an annual basis.
"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."
Western Australian Chamber of Minerals and Energy chief executive Reg Howard-Smith said worker safety was of primary concern.
"The Pilbara region is of great economic importance to the WA and national economies. Unfortunately, the region also has plenty of cyclone activity," Mr Howard-Smith said.
"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.
According to the port's website, it experiences an average of three cyclones a year.
Frequently Asked Questions about this Article…
Cyclone Rusty is a large, slow-moving category three cyclone affecting the Pilbara. The storm is expected to bring strong winds and heavy rain that can cause flooding and long-lasting bad weather. According to the article, the cyclone has already halted about $500 million of iron ore exports, and any such interruption reduces production and can squeeze profit margins for mining companies operating in the region.
Rio Tinto, BHP Billiton and Fortescue Metals Group have been affected. Rio Tinto prepared by closing Port Walcott at Cape Lambert and finished loading ships at its Dampier ports. Port Hedland, used by BHP Billiton and Fortescue, officially closed early on Monday after the last vessel cleared the shipping channel. Rio Tinto’s Dampier and Cape Lambert ports, about 200 kilometres south of Port Hedland, also began closing operations.
The Pilbara iron ore industry is substantial — the article notes the regional industry is worth about $50 billion in exports per year. While the cyclone has already halted roughly $500 million of exports, companies typically plan for seasonal interruptions when assessing annual output.
Yes. The article quotes Professor Ian Plimer saying mining and resources companies plan for cyclone seasons and account for interruptions in output on an annual basis. He also noted that iron ore companies have cyclone-proofing mechanisms at each mine, reflecting standard industry preparedness.
Worker safety is the primary concern, according to Reg Howard-Smith, chief executive of the Western Australian Chamber of Minerals and Energy. Residents and resource-sector companies operating in the Pilbara are described as well drilled in how to prepare for cyclones, and ports and operators close or curtail operations to protect staff and assets.
The article states that the Dampier port’s website reports the area experiences an average of three cyclones a year, indicating cyclones are a regular seasonal risk for the Pilbara region.
Dampier port handles a variety of cargo, including supplies for offshore oil and gas facilities. That matters during a cyclone because port closures or disruptions can affect not only iron ore exports but also the flow of critical supplies for offshore energy operations.
Everyday investors should know that cyclone-related shutdowns can temporarily reduce production and tighten profit margins for major iron ore producers, but the industry routinely plans for seasonal disruptions and maintains cyclone-proofing and safety measures. Short-term export halts (the article cites about $500 million halted) can affect quarterly volumes, but companies factor such interruptions into annual planning.
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