Rio Tinto has advanced to the next stage of developing its world-class Simandou iron ore project in Guinea, approving US$170 million of further funding for mine, rail and port infrastructure work.

The $170 million investment - which comes on top of the US$650 million already spent on exploration, community development and evaluation studies - will take effect immediately, optimising the design of the mine, mine infrastructure, rail system and port facilities, as well as enabling further work on drilling operations, the company said in a statement today.

Rio Tinto said that it welcomes a recent acknowledgement from the Prime Minister of Guinea that, in order to make the project economic, it may consider an export route through Liberia.

"However, the current plan anticipates the construction of a mine at Simandou with an annual capacity of 95 million tonnes, a 650-kilometre dedicated industrial railroad passing through 21 km of tunnels traversing Guinea to the coast, a rail car-dumping facility and a four-berth wharf located 11 kilometres offshore from Matakang," it added.

The $170-million investment will include initial work on upgrading the national road, including access from Forecariah to the port site, building the construction wharf at the port and building project facilities in Forecariah, including offices and a logistics base.

Announcing the decision, Rio Tinto Chief executive iron ore Sam Walsh said recent additional studies and analysis following the global financial crisis had produced a better mine to port option, enabling delivery to market of at least 95 million tonnes a year of a high-grade sinter fines product.

"Simandou will be the largest integrated iron ore mine and infrastructure project ever developed in Africa. Rio Tinto's experience and expertise developing large-scale iron ore projects will be enable us to bring this complex project on-stream," he said.

This follows the signing of a binding agreement with the Chinese company Chalco last week, under which a joint venture to develop and operate the Simandou iron ore project will be established.

"We expect to start mining operations within five years. Additionally, while we now identify a 95 million-tonne operation as the optimal capacity for the initial development, we believe there is considerable scope to expand the project in subsequent years," said Walsh.