Diversified-miner Rio Tinto has approved a $2,15-billion expansion of its iron-ore mine to increase the operation's capacity more than sixfold, to 12,8-million tons a year, and to study the potential for further expansion.

The first new production is expected to come online in the fourth quarter of 2010, Rio Tinto said.

The capital expenditure includes $42-million for a feasibility study into a second phase of expansion, to take capacity to 23,2-million tons a year. The study is scheduled for completion by mid-2009.

The phase one expansion, announced on Tuesday, will involve the expansion of the Corumbá mine, as well as its associated logistics chain.

Two new ports will be constructed, together with improved infrastructure networks, and, a new long-term transshipping services contract will enable ocean-going vessels to be topped up before shipping to markets.

The expansion of Corumbá, which produces high-quality blast-furnace lump and direct reduction products, would capitalise on increasing demand for iron-ore in South America and the Middle East, and increase Rio Tinto’s presence in Europe, the group said.

“This is a most significant project – locally and internationally. It is scalable, it combines greenfields and brownfields opportunities, and it allows us to market an upgraded lump product through demonstrated drying technology,” said Rio Tinto iron-ore CEO Sam Walsh.

Rio Tinto is the world's second-largest iron-ore producer, after Brazil's Companhia Vale do Rio Doce.

The company is the subject of a hostile takeover attempt by the third-biggest iron-ore miner and the largest mining group in the world, BHP Billiton.

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