Rio Tinto has announced its first major investment in China since the Stern Hu spy affair disrupted its dealings in the nation, AAP reported.
In a statement, the mining giant said its subsidiary, Alcan Engineered & Automotive Solutions, had signed an agreement with Changchun Engley Automobile Parts.
In early afternoon trade, shares in Rio Tinto were trading up $2.27, or 3.93 per cent, at $60.
EAS and Engley will develop and produce crash management systems, instrument panel beams and other goods for the fast-growing Chinese car market.
It is understood the new agreement was signed on September 25.
A Rio Tinto spokesman said it would be the first substantial investment in China by the miner since the Stern Hu affair.
Rio and its Canadian partner, Ivanhoe Mines, signed an agreement with the government of Mongolia, next door to China, to develop a $US3 billion ($3.38 billion) gold and copper project.
In July, Rio Tinto's relationship with the Chinese government deteriorated after four employees, including Australian national Stern Hu, were arrested and accused of stealing state secrets.
The four men were involved in iron ore price negotiations and remain in custody awaiting trial, although charges have been downgraded.
BT Investment Management resources analyst Tim Barker said the latest investment showed Rio Tinto was again engaging with China.
"This is the first tangible evidence that they are sticking their feet back in and probably reflects the fact that, at the end of the day, they are going to have some relationship with the Chinese," Mr. Barker said.
The deal with Engley probably had been in the works for some time and had been put on the backburner after the Stern Hu affair hit the headlines.
Rio Tinto is the majority owner of the new venture, Alcan Engley Automotive Structures Co Ltd, with the first products expected to be shipped later this year.
"Alcan's advanced aluminium lightweight solutions play a significant role in today's fuel-efficient cars all over the world including China," EAS president Wolfgang Schmitz said in a statement.
"China is posting double digit growth in car sales and will continue to offer exceptional growth opportunities for our engineered products in the coming years," he said.
The company will be based in the north-eastern city of Changchun, with a second manufacturing plant in Kunshan, close to Shanghai.
Rio Tinto acquired EAS as part of its $US38.1 billion purchase of Alcan in 2007.
Yekaterina Davydova, Rough&Polished Asian Bureau Editor in Beijing
