Tugboat workers at Australia's main iron ore port threaten to hold a strike that could halt a quarter of the world's iron ore exports and cost miners AUD 100 million a day, just as the industry battles to slash costs and get more out of its workers.

The dispute comes as resource firms say Australia has become far more expensive than other locations as a now maturing project construction boom, driven by Chinese demand, led to fat pay packets and lavish conditions.

In some outback mines, for example, workers are flown back and forth from resort like housing, while cooks and laundry hands at some gas projects can earn as much as AUD 350,000 year.

Tugboat deckhands at Port Hedland, used by Australia's second and third largest iron ore producers, on Monday approved a plan to go on strike for one, two or seven days if they are unable to resolve a dispute over vacation and pay.

A disruption in shipments from BHP Billiton and Fortescue Metals Group may help prop up iron ore prices that have lost 14% from April highs, although bigger rivals Rio Tinto and Brazil's Vale could fill any short term gap in a well supplied market.

The Maritime Union of Australia representing deckhands, said it remained in talks with tugboat operator Teekay Shipping Australia to resolve the dispute and no decision had been made yet on whether to strike.

Deckhands, who work four weeks on and four weeks off for AUD 135,000 a year, want four weeks of annual leave on top of that. They said that is less than the industry standard of six weeks annual leave for workers who are on a similar roster.

Mr Will Tracey assistant Western Australia secretary of the MUA said that "We think this is very reasonable, given our members work 12 hours a day for 28 days straight in very tough conditions."