Port Hedland in Western Australia is on red alert as the category three Severe Tropical Cyclone Rusty moves slowly towards the coast.
Port Hedland residents have been urged to leave their homes immediately.
Emergency shelters have been opened at the Andrew McLaughlin Community Centre on Keesing Street in Port Hedland and at the Wanangkura Recreation Centre on Hamilton Road, South Hedland.
At 10.40am (WST), the cyclone was 170km north northeast of Port Hedland and 320km northeast of Karratha, moving south at 6km/h.
The red alert applies to areas between Pardoo and Whim Creek, including Port Hedland, which is Australia's biggest iron ore port and is already being buffeted by wind gusts of up to 120km/h.
Conditions in the town are expected to worsen during Tuesday and Wednesday.
Very destructive winds with gusts of more than 165km/h are likely to develop on the coast between Whim Creek and Pardoo on Wednesday as Rusty approaches the coast, the weather bureau says.
During Tuesday and Wednesday, very heavy rainfall is likely to lead to major flooding in the De Grey catchment.
Significant flooding is expected in the Fortescue catchment and in Pilbara coastal streams.
The cyclone's intensity, size and slow movement is also likely to lead to a very dangerous storm tide.
Shops in Port Hedland are being sandbagged, with supermarket shelves clear of water and tinned food.
Bottle shops are reporting long queues as locals prepare for Rusty's arrival.
Port Hedland's airport was shut at 9pm (WST) on Monday and all commercial flights cancelled.
The port is also in shutdown, possibly for the rest of the week at least.
Eleven schools have been closed.
Images from NASA's Terra satellite show Rusty is developing an eye 20 nautical miles wide.
The Kimberley town of Broome has been given the all-clear, however.
A second potential cyclone is developing to the southeast of the Cocos Islands and will be named Sandra if it becomes a cyclone.