Rio studying ways to mine more iron ore

SYDNEY (Reuters) - Rio Tinto (RIO.AX: Quote, Profile, Research, Stock Buzz), which is fighting off a takeover approach from rival BHP Billiton (BHP.AX: Quote, Profile, Research, Stock Buzz), said on Monday it would spend $71 million on a study to expand its Hope Downs iron ore mine in Australia.

The study comes as Rio (RIO.L: Quote, Profile, Research, Stock Buzz) allocates at least $1 billion to increase its overall mining capacity from Australia's ore-rich Pilbara region to 320 million tonnes a year in about five years.

Rio, already the world's number two-ranked iron ore miner by volume behind Brazil's Vale (VALE5.SA: Quote, Profile, Research, Stock Buzz), has been promoting its own growth prospects since BHP (BLT.L: Quote, Profile, Research, Stock Buzz) announced a $139 billion three-for-one share offer proposal for Rio on November 8.

Rio immediately rebuffed the overture, although BHP has persisted in promoting what it calls "compelling synergies" in a tie up, underscored by the two companies neighboring iron ore operations in Australia.

Britain's Takeover Panel on Friday ordered BHP to decide by February 6 whether to make a bid for Rio or walk away under a 'put up or shut up' clause.

BHP said it had yet to decide on its next move.

A tie-up would assemble a massive controlling force across a range of industrial-use commodities beyond iron ore, such as copper, aluminum and coal -- raw materials driving growth in emerging nations such as China and India.

Rio this year became a titan in world aluminum making after acquiring Canada's Alcan for $38 billion.

BHP has said a marriage would create value for shareholders in both companies, generating $3.7 billion in synergy benefits after seven years, and has pledged to buy back $30 billion in shares if the deal goes through.