Rio Tinto has approved a $919 million investment to extend the life of the Marandoo iron ore mine by 16 years to 2030.

Rio Tinto chief executive Iron Ore and Australia, Sam Walsh said the Marandoo extension plays an important role in sustaining the Pilbara operations' annual capacity rate, complementing the major expansion programmes now underway.

Located 35km north east of the town of Tom Price, the project will extend the Marandoo mine life at its current mining rate of 15 million tonnes a year by developing the adjacent reserves below the water table.

"With a high iron and low phosphorus content, Marandoo's Marra Mamba ore assists in maintaining the Pilbara Blend grade requirements and maximising the value of our integrated Pilbara operations,” Mr Walsh said.

"It also underlines our ability to develop projects to sustain tonnage at the same time as expanding our overall production capability."

One component of the Marandoo project is a water management strategy to manage the operation's dewatering, including priority water delivery to the Tom Price township and mine operations, the reinjection of water into the Southern Fortescue borefield to the north and a proposed irrigated agriculture scheme.

The project includes the construction of a wet processing plant and on-site facilities, an accommodation village and construction camp and additional mining fleet.

The project requires a number of Government and regulatory approvals, all of which have been received or are progressing well and on schedule.

Separately, Rio said it approved a further $US277 million investment -- Rio Tinto's share $US163 million -- in the next phase of a project that will raise the Iron Ore Company of Canada's, or IOC, concentrate production capacity by 40 per cent to 26 million tonnes per year.