Fortescue Metals Group will spend about $US287 million ($A417 million) to develop the Queens Valley mining area in the iron ore rich Pilbara.
The development is part of the world's No.4 iron ore miner's plan to boost margins through higher grade products.
"The Queens mining area development will maintain our highly valued Kings Fines low-alumina sinter fines product which supplies Fortescue's key customers in China as well as in Japan and Korea," chief executive Elizabeth Gaines said in a statement on Wednesday.
Fortescue has been attempting to shore up demand by moving to produce higher grade iron ore, given that its lower grade products had fallen out of favour with Chinese buyers facing environmental restrictions.
In April, the miner said it would spend about $US2.6 billion with a Taiwanese partner to develop a "premium product" iron ore project in WA.
The Queens development is estimated to have a life of 10 to 15 years.
The miner has obtained environmental and heritage approvals to start work on the project.
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