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Port Hedland, Australia, Tugboat Strike Update

Maritime Activity Reports, Inc.

May 21, 2014

BHP Billiton said on Wednesday it may seek government intervention to avert industrial action by tugboat workers at the Port Hedland iron ore port that threatens to disrupt hundreds of millions of dollars in exports.

"It's highly likely we would do that," Jimmy Wilson, president of BHP's iron ore division, told reporters amid a long-running dispute between union workers and port services operator Teekay Shipping, which charges BHP a fee for operating tug services.

BHP also called the union's demands on pay and working conditions "unreasonable".

Australia's government has intervened in industrial disputes before. In 2011, the Fair Work Australia commission stepped in to end a long-running dispute between Qantas and three unions when the airline grounded its fleet, as the national carrier's move threatened damage to the country's economy. The commission or the government could take similar action in face of a strike at Port Hedland.

Wilson said existing constraints on shipping from Port Hedland - the world's biggest export terminal for iron ore, accounting for about a fourth of worldwide sea-borne trade - meant little room existed for stockpiling ore while industrial action ground ship movement to a halt.

"Our stocks in the port are relatively large and that backs up in the system very quickly and conversely we have to stop our mining activities," he said. "We choke reasonably quickly."

BHP is the port's biggest user and earlier this year lifted its fiscal 2014 production target to 217 million tonnes.

Other port users, such as Fortescue Metals Group Ltd and Atlas Iron Ltd are increasing output and were also facing significant disruptions to their operations if industrial action is taken, according to Wilson.

BHP has already warned that a strike would cost $100 million in lost sales a day, based on exports running at around 1.1 million tonnes a day at a price of around $100 a tonne.

Australian Maritime Officers Union industrial officer Robert Coombs said his union had already made concessions and would continue to negotiate for a resolution during conciliatory talks scheduled for June 5.


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