Rio Tinto has given the go ahead to a further USD 277 million investment in the next phase of a project that will ultimately raise the Iron Ore Company of Canada's concentrate production capacity by 40% to 26 million tonnes per year.

This is the second phase of a three stage expansion that was announced in May 2010 with a USD 400 million investment to raise production capacity from 18 million tonne per annum to 22 million tonne per annum.

Phase two of the project will increase IOC's spiral and magnetite concentrate production capacity by an average of 1.3 million tonne per annum to 23.3 million tonne per annum from 2013.

Recent studies have highlighted an opportunity to improve time to market through bringing forward some capital items from the third stage, resulting in higher level of production earlier. The third stage of the planned expansion to 26 million tonne per annum is currently under study and a final investment decision is expected by 2012.

Mr Sam Walsh CEO Iron ore and Australia of Rio Tinto said that the project was an important development in increasing IOC's production at a time when global demand is escalating. He said that "Global seaborne iron ore demand is projected to increase substantially over the next decade, and IOC's concentrate is well placed to complement the increasing use of lower-quality ore to meet that demand. With high iron content and very low levels of impurities, IOC's concentrate provides significant value to steel producers as ore grades from direct shipping mines continue to decline."

The project's construction is set to start immediately to capitalize on the brief Labrador summer construction season and will be fully commissioned by the end of 2012.