Australia Aims to Avert Port Strike

Posted by Joseph Keefe May 20, 2014

Teekay Shipping took part in Australian government-sponsored mediation talks on Tuesday to avert industrial action by tugboat operators that could halt a quarter of global seaborne iron ore exports.

There were no immediate comments on any outcome from the talks. BHP Billiton has previously warned that a strike by tugboat operators at Port Hedland on the Indian Ocean could cost up to $100 million in lost revenue each day.

Deckhands, engineers and masters of the tugboats that guide vessels in and out of the port are pressing operator Teekay Shipping for more pay and leave.

Deckhands, represented by the Maritime Union of Australia, last week approved plans to strike for one, two or seven days but have yet to decide whether to stop work. Any strike by them would have to take place by June 11.

Teekay and the union had mediation talks on Tuesday held by Australia's industrial tribunal, the Fair Work Commission. A second round is due to take place in June.

If there is no resolution, one way the government could halt a strike by arguing the action would hurt Australia's economy.

Teekay could look at replacing deckhands with non-union workers, but people familiar with the issue said a lack of trained replacements would rule that out.

"We want to ensure the dispute does not impact our day-to-day operations and we are reviewing all options available to us to mitigate any potential impact on our business going forward," Fortescue Metals Group Chief Executive Nev Power said in a statement.

He did not elaborate but Fortescue is within its rights to ask the Fair Work Commission to stop the strike as a third party facing damages.

Iron ore is Australia's biggest export earner. The value of exports are forecast to climb 35 percent to A$76.8 billion ($71.80 billion)in the year to June 2014 from a year earlier, according to the Bureau of Resources and Energy Economics.

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 around $100 a tonne.

"BHP's broadcasting its position to obtain support from other stakeholders, so they could seek an order for suspending or terminating protected industrial action in a case where significant economic damage is being inflicted on the Australian economy," said Tim Greenall, counsel at law firm Madgwicks.

The government is so far monitoring the situation.

"At this stage we're just hopeful both parties can reach an agreement," said David Allender, a spokesman for Employment Minister Senator Eric Abetz.

The deck hands have been the first to back strike action.

The engineers, represented by the Australian Institute of Marine and Power Engineers, are voting on a plan to strike for up to two days, with the ballot result due on June 10. Tugboat captains, represented by the Australian Maritime Officers Union, hold a ballot due on May 30.

All crews work 28 days on, then get 28 days off. The deckhands want four weeks of leave on top of that and are pressing for pay equivalent to 70 percent of the A$220,000 that masters earn, up from A$135,000 a year.