UPDATE 1-Rio says to revamp Australia aluminium smelter

(Adds details, share price)

SYDNEY, Feb 8 (Reuters) - Rio Tinto Ltd/Plc (RIO.AX: Quote, Profile, Research, Stock Buzz)(RIO.L: Quote, Profile, Research, Stock Buzz) said its aluminium smelting complex in Boyne Island, Australia will get a $617 million environmental upgrade to reduce carbon emissions.

The funds will be spent to construct a new baking furnace at the facility and for other improvements, which will lead to a roughly 20,000-tonnes-per-year drop in carbon emissions, it said.

Rio said will shoulder 59.4 percent of the cost of the upgrade, will take about three years to complete, with its partners picking up the rest.

Rio last year bought Canada's Alcan, giving it a combined aluminium smelting capacity approaching 4.4 million tonnes, out of a projected 37 million tonnes to be consumed worldwide this year.

Rio, the target of a hostile $147 billion takeover offer from close rival BHP Billiton Ltd/Plc (BHP.AX: Quote, Profile, Research, Stock Buzz)(BLT.L: Quote, Profile, Research, Stock Buzz), has pointed to its growth prospects in aluminium as a reason why its shareholders should reject the offer.

Rio shares were down 1.5 percent to A$125.10 in afternoon trading. BHP was 1.8 percent lower at A$36.26, while the wider S&P/ASX 200 index was about 1 percent higher. (Reporting by James Regan)