Iron Ore Exports at Port Hedland at Risk; Tug Workers Strike Approved to Push Through; At Least $100M/Day Could Be Lost

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By Esther Tanquintic-Misa | May 13, 2014 12:02 PM EST

Ships waiting to be loaded are seen near piles of iron ore and bucket-wheel reclaimers at the Fortescue loading dock located at Port Hedland, in the Pilbara region of Western Australia in this December 3, 2013 file photograph. Tugboat workers at Australia's biggest iron ore port have approved a plan to go on strike, which would halt a quarter of the world's iron ore exports, if they are unable to resolve a dispute over leave and pay, their union said on May 12, 2014. BHP, which holds the licence for the tugboats at Port Hedland, estimated a strike would cost suppliers who use the port around A$100 million ($93.5 million) a day. REUTERS/David Gray/Files
Ships waiting to be loaded are seen near piles of iron ore and bucket-wheel reclaimers at the Fortescue loading dock located at Port Hedland, in the Pilbara region of Western Australia in this December 3, 2013 file photograph. Tugboat workers at Australia's biggest iron ore port have approved a plan to go on strike, which would halt a quarter of the world's iron ore exports, if they are unable to resolve a dispute over leave and pay, their union said on May 12, 2014. BHP, which holds the licence for the tugboats at Port Hedland, estimated a strike would cost suppliers who use the port around A$100 million ($93.5 million) a day. REUTERS/David Gray/Files

Australia, in the midst of a fading mining boom, stands to suffer more losses of at least $100 million a day if tugboat workers at Port Hedland make good their threat to stage a labour strike within the next 30 days. The impending industrial work stoppage could cripple Australia's most lucrative iron ore exports.

Tugboat deckhands at Port Hedland on Monday voted to stage a labour strike if they are unable to resolve a dispute over vacation and pay with Teekay Shipping.

According to the Maritime Workers Union (MUA), which represent the deckhands, 100 per cent of workers voted to strike for 24 hours, while 98 per cent voted to stop work for periods of 48 hours and seven days.

"It has not yet been decided whether industrial action will be taken or which option will be exercised," Will Tracey, MUA assistant WA secretary, said in a statement.

Deckhands are clamouring for an annual leave of four weeks on top of the prevailing system which is four-weeks-on and four-weeks-off.

"We think this is very reasonable, given our members work 12 hours a day for 28 days straight in very tough conditions," Tracey said.

A truck drives past piles of iron ore at the dump site of a port in Rizhao, Shandong province in this October 3, 2013 file photo. Chinese steel and iron ore futures extended recent losses on April 14, 2014, pressured by a weak outlook for demand in the world's top consumer of the two commodities. A seasonal pickup in steel consumption in China is unlikely to be enough to prop up steel prices given downside risk to economic growth and Beijing not keen on providing major stimulus measures. REUTERS/China Daily/Files
A truck drives past piles of iron ore at the dump site of a port in Rizhao, Shandong province in this October 3, 2013 file photo. Chinese steel and iron ore futures extended recent losses on April 14, 2014, pressured by a weak outlook for demand in the world's top consumer of the two commodities. A seasonal pickup in steel consumption in China is unlikely to be enough to prop up steel prices given downside risk to economic growth and Beijing not keen on providing major stimulus measures. REUTERS/China Daily/Files

Moreover, they also want a 70 per cent hike to close the gap from what the tugboat masters earn which is A$220,000 per year.

BHP Billiton, which holds the licence for the tugboats at Port Hedland, blasted the impending strike threat.

"Given the current wages and conditions, we think it would be irresponsible for the MUA to take industrial action that would put a stop to one of Australia's most critical national exports," a BHP Billiton spokeswoman said.

A disruption could propel up prices of iron ore in the market.

"It depends on how long the strike lasts. If it lasts for a week or even longer this will provide a strong support to iron ore prices," an iron ore trader in Shanghai told Reuters.

State and federal governments also stand to lose royalty and tax revenue if the strike pushes through, BHP said.

A worker levels the iron ore in a freight train at a railway station at Chitradurga in the southern Indian state of Karnataka in this November 9, 2012 file photo. One of Indian prime ministerial hopeful Narendra Modi's main election planks is to crank up manufacturing to create millions of jobs by focusing on exporting steel, not iron ore. REUTERS/Danish Siddiqui/Files
A worker levels the iron ore in a freight train at a railway station at Chitradurga in the southern Indian state of Karnataka in this November 9, 2012 file photo. One of Indian prime ministerial hopeful Narendra Modi's main election planks is to crank up manufacturing to create millions of jobs by focusing on exporting steel, not iron ore. REUTERS/Danish Siddiqui/Files

"We estimate this will cost suppliers who ship out of Port Hedland around $100 million a day," the company said in a statement. "Significant royalty and tax revenue will be lost to the Western Australian and federal governments."

"Mining companies like BHP Billiton are not able to make up lost volume of this nature, and governments cannot recover these lost royalties and taxes."

Port Hedland has three maritime unions. The other two, the marine engineers and maritime officers, are also considering strike action.

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(Photo: / )
Ships waiting to be loaded are seen near piles of iron ore and bucket-wheel reclaimers at the Fortescue loading dock located at Port Hedland, in the Pilbara region of Western Australia in this December 3, 2013 file photograph. Tugboat workers at Australia's biggest iron ore port have approved a plan to go on strike, which would halt a quarter of the world's iron ore exports, if they are unable to resolve a dispute over leave and pay, their union said on May 12, 2014. BHP, which holds the licence for the tugboats at Port Hedland, estimated a strike would cost suppliers who use the port around A$100 million ($93.5 million) a day. REUTERS/David Gray/Files
(Photo: / )
A truck drives past piles of iron ore at the dump site of a port in Rizhao, Shandong province in this October 3, 2013 file photo. Chinese steel and iron ore futures extended recent losses on April 14, 2014, pressured by a weak outlook for demand in the world's top consumer of the two commodities. A seasonal pickup in steel consumption in China is unlikely to be enough to prop up steel prices given downside risk to economic growth and Beijing not keen on providing major stimulus measures. REUTERS/China Daily/Files
(Photo: / )
A worker levels the iron ore in a freight train at a railway station at Chitradurga in the southern Indian state of Karnataka in this November 9, 2012 file photo. One of Indian prime ministerial hopeful Narendra Modi's main election planks is to crank up manufacturing to create millions of jobs by focusing on exporting steel, not iron ore. REUTERS/Danish Siddiqui/Files
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