March 7 (Bloomberg) -- Tropical Cyclone Hamish was upgraded to a category three storm that may bring “destructive winds” to northeast coastal regions and islands, Australia’s weather forecaster said.

The cyclone is located in the northwestern Coral Sea off the coast of Queensland state. It was estimated to be 230 kilometers (143 miles) east of Cairns and 310 kilometers north- northeast of Townsville, heading south-southeast at 17 kilometers an hour at 8:02 a.m. local time, the Bureau of Meteorology said on its Web site.

“Damaging wind gusts may develop about coastal and island communities between St. Lawrence and Hervey Bay within 24 to 48 hours,” the bureau said.

Queensland accounts for about 95 percent of sugar production in Australia, the world’s second-largest exporter. Much of the sugar cane is grown in coastal regions. The state is also home to coal and base metal mines.

Heavy rain in northern Queensland in recent months caused flooding that may cut sugar output as much as 15 percent in 2009, CSR Ltd., the nation’s biggest sugar refiner, said last month.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.

Last Updated: March 6, 2009 17:55 EST