Mining giant BHP Billiton is prepared to use national interest laws to prevent a strike at Australia's largest export port which could cost up to $700 million.
BHP, the world's largest mining company, says strike action by tugboat workers at Port Hedland could force the company to halt production at its nearby iron ore mines once stockpiles reach capacity within days.
It could also affect production for other port users such as Fortescue Metals Group, Atlas Iron and BC Iron.
Talks between the Maritime Workers Union (MUA) and Teekay Shipping have been deadlocked for more than a week following 11 months of discussions over pay and leave entitlements.
BHP and others are considering applying to the Fair Work Commission to bring the matter to arbitration and deliver a definitive outcome as they seek to calm the nerves of Chinese customers.
"We will progress all avenues under Fair Work that we can," BHP Billiton president of iron ore Jimmy Wilson told reporters on Wednesday.
Mr Wilson added that strike action could damage the country's reputation and harm the national interest.
National interest laws could be activated by either Teekay Shipping, the federal government or third parties.
"We will use every arrow in the quiver to avoid having a strike here and if we do have a strike we'll continue to use those arrows," Mr Wilson said.
Stock levels and mining volumes at Port Hedland were large, allowing around three to five days before mining would have to cease in the event of a strike.
"Very quickly, we would need to stop. We choke reasonably quickly," he said.
BHP estimates the West Australian government receives around $3 billion in iron ore royalties per year from BHP Billiton and Fortescue Metals Group who use Port Hedland.
Teekay Shipping managing director David Parmeter said Port Hedland tugboat crews had the most generous pay and entitlement packages in the Australian towage industry.
"The union's demands for more are not operationally or economically sustainable," he said.
But MUA WA Assistant Branch Secretary Will Tracey disagreed, saying at other ports a tugboat deckhand is paid 70 per cent of the wage that a tugboat skipper receives.
Port Hedland deckhands want their wages to rise from 62 per cent of the wage that a skipper receives to 67 per cent.
The tugboat workers have until mid June in which to take the protected action and the MUA must give Teekay three days notice ahead of any strike action which could last between one to seven days.
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