Mondium will undertake all engineering and design, procurement and site construction works, including the process plant, overland conveyor and non-process infrastructure.
The work is expected to create 450 jobs starting in the current quarter and is expected to be completed in 2021.
"We're committed to supporting WA businesses, buying locally and supporting our communities through the creation of jobs," Rio Tinto Iron Ore CEO Chris Salisbury said.
"We're continuing to invest in Western Australia and have a number of development projects in the pipeline that will continue to provide opportunities for local companies."
Rio approved the US$749 million WTS2 project, part of the Greater Tom Price operations, in November.
Mondium is 60%-owned by Monadelphous and 40%-owned by Lycopodium.
The Perth-based JV was established in late 2016.
Mondium managing director Andrew Carnie said the contract was a major strategic milestone for the company in its growth strategy.
"Mondium has been working hard to execute projects successfully and prove our capability," he said.
"We are thrilled to be making great strides in our growth strategy and to have secured this significant contract with Rio Tinto."
Shares in Monadelphous were down 0.3% to A$17.14, while Lycopodium was up 1.7% to $5.90.