China's state-owned Aluminium Corporation of China (Chinalco) will put $19.5 billion into troubled mining giant Rio Tinto, Beijing's biggest investment ever in a foreign company.

The "strategic partnership" would give Chinalco stakes in mining assets as well as bonds convertible to Rio shares, which could eventually raise its overall stake in Rio to 18 per cent, two companies said.

Rio will raise a further $7.2 billion by issuing Chinalco convertible bonds, which will be converted into shares in seven years, increasing the Chinese company's holding in Rio from 9 per cent to 18 per cent.

The investment would give China more leverage over the resources and raw materials to fuel its economic boom.

The boards of Rio Tinto Plc and Rio Tinto Limited (Rio Tinto) today unanimously recommended to shareholders a transaction with Aluminium Corporation of China ("Chinalco"), a leading Chinese diversified resources company.

''The transaction will forge a pioneering strategic partnership through the creation of joint ventures in aluminium, copper, and iron ore as well as the issue of convertible bonds to Chinalco, which would, if converted, allow Chinalco to increase its existing shareholding in Rio Tinto,'' Rio Tinto said in a press release.

''The transaction is intended to position Rio Tinto to lead the resources industry into the next decade and beyond by ensuring the continuity of its strategy with the benefit of Chinalco's relationships, resources and capabilities,'' the rel;ease said.

Under the deal, Chinalco would put up $12.3 billion to acquire stakes in aluminium, bauxite, copper and iron ore projects and buy $7.2 billion in bonds that would convert to Rio shares at a later date.

''The transaction will forge a pioneering strategic partnership through the creation of joint ventures in aluminium, copper, and iron ore as well as the issue of convertible bonds to Chinalco, which would, if converted, allow Chinalco to increase its existing shareholding in Rio Tinto,'' the company said in a release.

The transaction is intended to position Rio Tinto to lead the resources industry into the next decade and beyond by ensuring the continuity of its strategy with the benefit of Chinalco's relationships, resources and capabilities, it added.

"It reflects our continued confidence in the long-term prospects of the industry and the Chinese economy," Chinalco president Xiao Yaqing said.

"It also allows Chinalco a significant role in a strong industry with excellent growth prospects," he said.

The investment, which gives Chinalco two seats on Rio's board, reflects the growing might of the Chinese economy.

China is trying to park a big chunk of its growing wealth in the world's natural resources that would fuel the country's economic growth.

China was heavily dependent on Australia for mineral resources before the global economic downturn lulled its virtually unquenchable demand for raw materials.

The changes in foreign investment rules announced by Australia after a decade-long minerals boom, only helped to drive down Chinese demand for Australian resources.

The Australian government, meanwhile, is expected to subject the deal to a thorough scrutiny.

The deal also needs the approval of Rio's shareholders.

Rio Tinto, which had earlier staved off a hostile takeover bid by larger rival BHP Billiton, said the cash infusion would provide immediate help in dealing with its substantial debt load.

Based in the UK, Rio Tinto combines London and NYSE-listed Rio Tinto plc and Rio Tinto Limited, which is listed on the Australian Securities Exchange.

With operations in Australia, North America, South America, Asia, Europe and southern Africa, Rio Tinto prospects and processes mineral resources, including aluminium, copper, diamonds, energy (coal and uranium), gold, industrial minerals (borax, titanium dioxide, salt, talc) and iron ore.