Rio Tinto's Alcan sets up China car parts venture

Rio Tinto Plc's Alcan Automotive said Monday it would set up a joint venture with China's Changchun Engley Automobile Parts Co Ltd to try to cash in on a growing market for fuel-efficient vehicles in the world's third-largest economy.

The companies did not disclose the financial terms of their agreement.

The new joint venture will be based in Changchun in northeastern China and the company plans to open a second manufacturing plant in Kunshan near Shanghai, Alcan said.

Called Alcan Engley Automotive Structures Co Ltd, the new venture will make crash management systems, instrument panel beams in aluminum and other structural aluminum parts.

Alcan will be the majority shareholder and plans to start supplying products in late 2009.

"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," Wolfgang Schmitz, president of Alcan Engineered & Automotive Solutions, said in a statement.

Alcan Engineered & Automotive Solutions is a unit of Rio Tinto and makes lightweight aluminum engine parts, which the company says can lower emissions and boost fuel economy.