(Reuters) -Australia's Rio Tinto and Hancock Prospecting will invest $1.61 billion to develop the Hope Downs 2 iron ore project in Western Australia's Pilbara region, Rio Tinto said on Tuesday.

Hope Downs 2 project, containing the Hope Downs 2 and Bedded Hilltop deposits, is a joint venture between Rio and Hancock Prospecting with both parties holding equal stakes.

The two iron ore pits will have a combined total annual production capacity of 31 million metric tons, Rio said in a statement.

Ore mined from the two sites will be transported to Hope Downs 1 for processing and first iron ore from the project is scheduled for 2027, Rio said.

Rio Tinto expects to invest more than $13 billion on new mines, plant and equipment over the next three years, the company said.