rt force tugboat teekay port hedland

BHP Vows to Prevent Port Hedland Tugboat Strike as Union Cites Impasse

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August 5, 2014

RT Force, a tug owned by Teekay Shipping (Australia) Pty, image courtesy Port Hedland Port Authority

Jasmine Ng and Phoebe Sedgman

Aug. 6 (Bloomberg) — BHP Billiton Ltd., the world’s biggest mining company, is seeking to stop planned strikes by tugboat engineers at Australia’s Port Hedland export terminal which ships more than half the country’s iron ore.

Members of the Australian Institute of Marine & Power Engineers notified Teekay Shipping (Australia) Pty that they intend to stop for four hours each day on Aug. 9, Aug. 11 and Aug. 13, Teekay said today. BHP, which contracts Teekay to tow vessels, believes the industrial action to be unlawful and Teekay said it’s seeking an injunction to halt it.

Stoppages threaten exports by companies including BHP and Fortescue Metals Group Ltd. Iron ore is Australia’s biggest export earner and disruptions could cost suppliers about A$100 million ($93 million) a day, BHP estimated in May. Shipments through Port Hedland represented 55 percent of the country’s iron ore exports last year and a quarter of global seaborne supply, according to government data. Morgan Stanley doesn’t expect the action to affect prices.

“We do not expect the 12 hours of lost time to materially impact the global seaborne iron ore market or pricing,” bank analysts including Joel Crane wrote. If conducted at high tide, each four-hour stoppage could affect as much as 500,000 tons, or 1.5 percent of monthly volumes, they said.

Iron ore has tumbled 29 percent in 2014 as companies from Rio Tinto Group to BHP increased output, betting higher volumes will more than offset falling prices. Ore with 62 percent content delivered to Tianjin in China rose 0.1 percent to $95.50 a dry ton yesterday, according to The Steel Index Ltd.

12-Hour Shifts

The engineers union said Teekay did not want to employ additional crews to facilitate a cap on 12-hour shifts. “Negotiations are at an impasse,” union official Andrew Williamson told Bloomberg by phone. “That’s the reason why the union decided to elevate the matter and issue protected industrial action.” Teekay considers the action unprotected.

A separate union representing deckhands at Port Hedland approved industrial action on July 23 for a second time at the facility, which is located about 1,300 kilometers (808 miles) north of Perth and handles output mined in the Pilbara, Australia’s biggest producing region. The union hasn’t yet announced any stoppages.

–With assistance from Rebecca Keenan in Perth.

Copyright 2014 Bloomberg.

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