Cyclone Set to Threaten LNG, Iron Ore Operations in Australia

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(Bloomberg) — A cyclone that menaced Australia’s northeast coast last week now threatens to disrupt energy and mining operations in the country’s west. 

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Currently a low-pressure system, Narelle is expected to re-intensify into a cyclone as it emerges over exceptionally warm waters of the South Indian Ocean later Tuesday, according to the Australian Bureau of Meteorology. From there, it is forecast to strengthen as it moves along the Pilbara coast Wednesday and Thursday, the bureau said, fueled by waters measuring 31C (89F).

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Along Narelle’s projected path are several liquefied natural gas facilities, including Chevron Corp.’s Gorgon and Wheatstone projects, which have a combined capacity of nearly 30 million tons a year and are major sources of global fuel supply. 

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“Tropical Cyclone Narelle’s primary threat to LNG facilities is less about catastrophic structural failure and more about operational disruption,” said James Caron, director of meteorological operations for North America and Asia at Atmospheric G2. “The most likely impact is temporary shutdowns of production and delays in cargo loading.” 

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Further inland, open-pit iron ore mines may also fall within the cyclone’s area of impact. While there is some uncertainty around how Narelle’s track and intensity will develop, forecasts suggest the system could cause large swells along the Pilbara coastline from late this week, affecting ports crucial for iron ore exports, said Alex Zadnik, business manager for Australia at MetraWeather. 

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Last year, a series of cyclones dumped heavy rain across the Pilbara, disrupting iron ore operations and even damaging a port facility used for outbound shipments. Flooding can also damage rail links used to transport ore from mines to ports. Australia is the largest exporter of iron ore, a key ingredient in steel production.

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Narelle last week forced the temporary closure of two of Rio Tinto Group’s bauxite mines in Queensland, and of the world’s largest manganese mine on the Northern Territory’s Groote Eylandt.

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