BHP Billiton and Rio Tinto together will spend $US4 billion to increase production at the Escondida copper mine in Chile.
BHP holds a 57.5 percent interest in Escondida and operates the mine, while Rio Tinto holds a 30 percent stake.
BHP will spend $2.2 billion and Rio Tinto $1.2 billion to replace a concentrator at the mine with a new plant to enable access to a higher grade of ore underneath the existing facilities, the companies said in statements.
Construction will begin in February with completion expected in the first half of 2015. The project is expected to create as many as 7,000 jobs during the construction phase.
BHP will also spend $414 million and Rio Tinto $216 million on a leaching pad and mineral handling system, which is expected to maintain leaching capacity at current levels past the end of 2014, BHP said in a statement.
Leaching is the process used to extract precious metals from ore.
BHP has also announced a 25 percent increase in ore reserves at Escondida after successful exploration programs.
BHP’s base metals president Peter Beaven said he expected a substantial recovery in copper production at Escondida to more than 1.3 Mt/a (1.4 million stpy) in the 2015 financial year.
"The success of our brownfield exploration program suggests there are sufficient resources at Escondida to sustain production at current levels for more than a century," he said.