Rio's $3.7bn iron ore expansion plan

The mining titan Rio Tinto has set out plans to spend $3.7bn (£2.4 bn) on expanding its iron ore operations in Pilbara, Western Australia.

The move comes despite slowing demand for the metal from its biggest customer, China, where manufacturing levels are dropping.

Rio said its investment will increase its iron ore production by 25 per cent by 2016.

This means that, once complete, the group's Australian mines will be producing 353 million metric tons a year – nearly a third of the world's iron ore.

The spending spree comes amid fears that an over-supply will push prices down.

Rio's rivals BHP Billiton and Fortescue Metals are both already involved in significant expansions elsewhere in Pilbara.

But Rio's chief executive, Tom Albanese, said: "We are mindful of short-term uncertainties, and remain fully committed to a balanced approach to investment, while maintaining a single-A credit rating and a progressive dividend policy."