Rio Tinto will invest $200m to expand its iron ore operations in Western Australia.

The news comes just two weeks after the company threatened to lower its investment in the region if a proposed 40% mining tax was brought in.

Australian Prime Minister Julia Gillard agreed to compromise on the mining tax, lowering it to 30% after several large mining companies warned that the tax could force them to delay or cancel projects.

Rio announced that the investment would go towards improvements at the Cape Lambert port to enhance output in the Pilbara, according to the BBC.