A $2.8 billion deal with China to mine bauxite and build an aluminium smelter in Queensland was the largest foreign investment in the state's history, Acting Premier Anna Bligh says.

Ms Bligh and the Chinese Vice-Premier, Zen Peiyan, are set to sign the agreement with the Aluminium Corporation of China (Chalco) on the rights to mine the Aurukun bauxite resource on Cape York Peninsula.

The company is the world's second biggest aluminium producer and has won an 18-month bidding process.

"This is a multi-billion dollar milestone in the relationship between Queensland and China," Ms Bligh said.

"China is an economic powerhouse that is shaping the world economy and this agreement is an enormous vote of confidence in our ability to meet their booming demand for resources."

Ms Bligh said Queensland was providing $300 million in funding for common infrastructure, including a bauxite loading facility and road and airstrip upgrades.

The upgrades were expected to benefit existing miners such as Rio Tinto Aluminium and future mining operations in the region.

Chalco is now in the final stages of reaching an agreement with the Wik Aboriginal people of the Aurukun region.

When that agreement has been reached, the company will embark on a two-year, $40 million feasibility study and environmental impact study for the mine and a $2.1 billion refinery.

Annual output from the mine was expected to be 6.4 million tonnes of bauxite and 2.1 million tonnes of aluminium from the refinery.

Chalco is looking at three sites for the refinery in Bowen, Townsville and Gladstone.

A decision on the site was expected some time this year.

Ms Bligh said the mine will create 700 construction jobs and more than 100 full time positions.

The refinery was expected to provide 1,600 jobs during construction and 500 workers when operational.