Rio Tinto to spend $131 million on mining town

MELBOURNE, Sept 23 (Reuters) - Rio Tinto Ltd/plc (RIO.AX)(RIO.L), the world's no.2 iron ore miner, said it would spend $131 million to improve housing and infrastructure in the town of Pannawonica in Western Australia to support a new mine.

Rio Tinto's investment is part of a total $247 million to be poured into Pannawonica to refurbish and build new homes, build a mining village, improve an air strip, and spruce up buildings for the Mesa A/Warramboo iron ore mine, due to be completed in 2010.

The company provides all infrastructure, housing and services in the town, 1,430 kilometres (889 miles) north of Perth in the Pilbara region.

Mesa A/Warramboo is one of several projects Rio Tinto is working on to boost Pilbara iron ore production capacity to 320 million tonnes a year by 2012, key to its defence against a hostile takeover offer worth $138 billion from BHP Billiton Ltd/plc (BHP.AX)(BLT.L). (Reporting by Sonali Paul)