BHP, the operator, holds a 57.5 per cent stake in Escondida and will tip in $2.6 billion for processing equipment, while Rio, which holds a 30 per cent interest, will contribute $1.4 billion, the companies said.
A Japanese consortium led by Mitsubishi Corp. holds the remaining 12.5 per cent in what is the world's biggest copper mine.
The cash will deliver a new oxide leaching facility in 2014 and a new concentrator by 2015.
BHP also announced a 25 per cent increase in ore reserves at Escondida after successful exploration programmes, with targeted production of more than 1.3 million tonnes in the 2015 financial year.
"The success of our brownfield exploration programme suggests there are sufficient resources at Escondida to sustain production at current levels for more than a century," said BHP's base metals president Peter Beaven.