Cyclone gathers strength off Australia's west coast

CANBERRA (REUTERS) - Australia's first cyclone of the storm season is intensifying off the country's northwest and is expected to start affecting coastal areas in mining powerhouse Western Australia state as soon as Friday, the Australian Bureau of Meteorology said.

Cyclone Narelle, now a category three storm with winds of up to 165 kmh, was expected to gather strength and possibly be upgraded to a category four cyclone by Thursday afternoon.

The storm was moving southwest towards Australia's Pilbara coast, with winds of up to 100 kph to be felt by Friday morning, according to the weather bureau, potentially causing disruptions to iron ore mining and oil production.

Warming waters off Australia are prone to lead to cyclones between December and April. Cyclones interrupted mining operations last January.

Port Hedland on the northern Pilbara coast is used by BHP Billiton, Fortescue Metals Group Ltd and Atlas Iron to ship hundreds of millions of tonnes of ore annually.

The nearby ports of Dampier and Cape Lambert are used by Rio Tinto , which last year shipped more than 200 million tonnes of iron ore.

Port officials at Dampier and Port Hedland said the storm's progress was being closely monitored. At Dampier, authorities expected facilities to be shut down and ships to leave the port by later on Thursday.

The storm was also heading towards Karratha, 840 km away, which is a base for the US$27 billion (S$33.2 billion) North West Shelf LNG project involving Chevron energy, Shell and Woodside Petroleum, as well as other oil and gas ventures.

Iron ore was last quoted at US$158.50 a tonne, the highest price since Oct 14, 2011, in part on brisk buying by Asian steel mills ahead of any delays to shipments from Australia caused by cyclones.

Last March, Cyclone Lua halted production of about a quarter of Australia's daily oil production of about 390,000 barrels as companies were forced to suspend offshore drilling and evacuate staff.

Wind speeds are calculated using the Bureau of Meteorology's system categorising a cyclone's intensity on a scale of one to five.

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