BHP, Fortescue and others in talks about who pays after near miss by ore carrier the FMG Nicola

Pilbara Port Authority is discussing with BHP, Fortescue and Hancock Prospecting about funding a bypass channel to help safeguard the iron ore industry.

A 14km-long bypass channel will ease congestion at Port Hedland in WA.

The Pilbara Port Authority has begun work on a bypass channel to safeguard the iron ore industry and is in talks with the likes of BHP, Fortescue and Gina Rinehart’s Hancock Prospecting about who picks up the bill for a project expected to cost hundreds of millions of dollars.

The 14km-long bypass channel is slated for near where Andrew Forrest’s Fortescue sparked an emergency at Port Hedland – the world’s biggest bulk export port and vital to the national economy. One of Fortescue’s fully loaded iron ore carriers broke down and came close to blocking the main shipping channel used to send the steelmaking ingredient to China.

The West Australian government-owned port authority is also in talks with BHP and Fortescue about upgrading their tug fleets to cope with increases in iron ore exports and ship movements, including the import of wind turbines and blades to hit renewable energy targets. BHP’s tug fleet played a key role in the rescue of the FMG Nicola in an emergency in February.

Gina Rinehart’s Roy Hill should be a significant beneficiary. Picture: Colin Murty

It is understood BHP, which has the most to lose from a vessel grounding that shuts down Port Hedland, supports the creation of the bypass channel but is anxious about the funding model.

Experts advising port users have warned a “hard” grounding in the shipping channel would take at least six months to clear in what would be a massive blow to the Australian economy.

The shipping channel at Port Hedland is about 40km long and varies in width and depth. Fully loaded iron ore carriers depart on high tides with very little margin for error in a channel split into six navigational zones.

The port authority, known as Pilbara Ports, said it had started preparatory work on a bypass channel for Zone 5, and has been discussing the plans in port working groups.

The bypass channel would provide a means to keep small volumes of iron ore flowing if the main channel became blocked.

“A bypass channel would be dredged to a shallower depth than the main channel, allowing lightly-laden vessels to continue to enter and exit the port,” Pilbara Ports executive general manager Philip Christy said in response to questions from The Australian.

Pilbara Ports declined to provide an estimate of the cost but it is understood the entire length will not require dredging.

“Pilbara Ports is currently funding the completion of geotechnical investigations, which include subsea drilling and other geological surveys. Pilbara Ports is also funding the completion of environmental studies and other approvals,” Captain Christy said.

“Pilbara Ports is currently engaging with industry to agree a funding model for the bypass works and obtain other necessary approvals.

The FMG Nicola experienced a loss of power in the main channel on February 7.

“Significant investments have already been made to mitigate the risk of a channel incident including dredging, expansion of the tug fleet and updated guidelines and procedures for towage operations. These investments have reduced the overall risk of disruption at Port Hedland compared to other single-channel ports globally.”

Fortescue confirmed it was in talks with Pilbara Port and other port users about the bypass channel and its funding, and on its tug fleet. “Fortescue is actively engaged with Pilbara Ports Authority and other terminal users as part of discussions on potential funding models for the proposed bypass channel,” a spokesman said. “In parallel, Fortescue has been undertaking detailed towage modelling to support future port operations and growth.”

BHP was also contacted for comment.

It is more than a decade since BHP ditched plans to build an outer harbour at a cost of $20bn and started working closely with what is now Pilbara Ports on wringing more capacity from berths in the inner harbour. BHP produced 290 million tonnes of iron ore in the Pilbara in 2024-25 and made record shipments. The mining giant continues to weigh up plans to boost production to 330 million tonnes a year and sees a low capital pathway to 305 million tonnes in the meantime.

In the years since 2012 when BHP pulled out of the outer harbour project, Fortescue has lifted its annual shipments to 190-200 million tonnes and Mrs Rinehart’s Roy Hill mine has become a major exporter.

Chris Ellison’s Mineral Resources has started exporting iron ore and lithium, and Dale Henderson-led PLS has established itself as a big lithium exporter.

Pilbara Ports confirmed it was in talks with BHP and Fortescue about the size and capability of their tug fleets. The two iron ore miners are only towage providers at Port Hedland and both subcontract to operating companies. Towage is licensed on a common carrier basis, with the tug operators required to offer their services to all port users.

“Pilbara Ports has been engaging with the towage providers to ensure there is sufficient towage capacity to support future growth in shipping, which includes both an increase in iron ore throughput and the new berths at Lumsden Point,” Captain Christy said.

“The port needs a combination of different types of tugs. Escort tugs are the most powerful and in-demand tugs, which accompany iron ore vessels transiting the channel. It is essential the port maintains enough of these to avoid potential shipping delays.

“Tugs are also required for smaller general cargo ships, which are better served by smaller, less powerful tugs.”

Australia’s peak transport safety authority last week launched an investigation into the FMG Nicola emergency. The Australian Transport Safety Bureau said it was in the dark about the full extent of the incident and started investigating off the back of reports in The Australian.

Pilbara Ports said it had the power to compel towage operators to upgrade their tug fleets but did not think it would come to that with BHP and Fortescue.

Originally published as BHP, Fortescue and others in talks about who pays after near miss by ore carrier the FMG Nicola