The news came as BHP Billiton (bhp.ASX:Quote,News) chairman Don Argus wrote to Rio (rio.ASX:Quote,News) shareholders as the world's biggest miner keeps the pressure on its $150 billion takeover target during the lengthy competition process.
And it coincided with a solid bounce in BHP and Rio's share prices, amid renewed confidence in the commodities cycle despite an increasingly gloomy global economic outlook.
Rio announced yesterday that it planned to expand production at its Corumba iron ore mine in western Brazil from 2.4 million tonnes a year to 12.8 million tonnes by the end of 2010.
The miner will also conduct a feasibility study, to be completed by mid-next year, into a further expansion that would take capacity to 23.2 million tonnes a year.
The investment, which is aimed at capitalising on increasing iron ore demand in South America and the Middle East, will include two new ports in Albuquerque, Brazil, and Agraciada, Uruguay.
Rio chief executive Tom Albanese said the expansion was a "significant step'' forward in the miner's drive to extend its iron ore operations beyond Western Australia's Pilbara.
Rio, which has committed $11.6 billion to develop its iron ore business since 2003, already plans to grow its annual production in the Pilbara to 320 million tonnes by 2012 and to 600 million tonnes in the years beyond.
Meanwhile, the letter from Mr Argus to Rio shareholders confirmed that the various regulatory processes - investigations into whether BHP's acquisition of Rio will create monopolies in any commodities - will be finished by the end of 2008.
The proposed takeover requires approval from regulators in Europe, the US, Australia and South Africa and is facing a detailed second phase review from the European Commission.
Earlier this month, the U.S. Department of Justice and the Federal Trade Commission granted early termination of the Hart-Scott-Rodino waiting period, meaning the bid has effectively cleared US regulators.
Mr Argus also renewed his call for Rio shareholders to support BHP's offer, arguing the deal would create a merged company "without comparison'' and generate "substantial additional value for shareholders''.
Rio and BHP shares rose $1.01 to $39.26 and $2.35 to $121.50 respectively yesterday.
BHP hopeful of Rio success
