Metals: Rio Tinto to Invest $2bn in Brazilian Iron Ore Mine

Mining group Rio Tinto said yesterday it is to spend $2.15bn (£1.09bn) to expand production of its Corumbá iron ore mine in Brazil to almost 13m tonnes a year.

The mine currently produces about 2m tonnes and Rio Tinto is aiming to use the increased output to service markets in Latin America, the Middle East and Europe.

Rio Tinto, fighting a $150bn takeover bid from rival BHP Billiton, said it would also conduct a feasibility study for a second round of expansion at Corumbá which would boost output to more than 23m tonnes a year.

Iron ore prices are booming, driven by the global appetite for steel in developing countries. Last month China's biggest steel maker agreed a new contract with Rio Tinto at almost double the previous price.

Yesterday the Rio Tinto chief executive, Tom Albanese, said: "The move strengthens our position as the only iron ore producer with a truly global production and growth platform, giving us access to a wide range of markets."

As well as iron ore, Rio Tinto mines and processes aluminum, copper, diamonds, coal, uranium, gold and industrial minerals.

It is the second-largest mining group, by market value, behind BHP - and it is keen to underline its stand-alone growth capability as part of its defence strategy in the face of the BHP bid.