More than 130 jobs are to be created in Bedwas over the next five years with the reopening of a mothballed aluminium factory.
Body parts for a new fleet of zero-emission London black cabs will be made by Sapa Components UK at its site on Pantglas Industrial Estate.
The Bedwas plant was closed in 2014 with the loss of 132 jobs, but the factory was retained by Norwegian-owned Sapa.
The chance to reopen the facility came when Sapa Components UK, which supplies all the major vehicle manufacturers with aluminium based sub-assemblies and components, secured contracts to supply the new plug-in hybrid TX-5 London cab.
Diesel taxis will no longer be licensed from January next year in a bid to reduce pollution levels in central London.
The company is investing £9.6 million into the factory with £550,000 coming from the Welsh Government.
First Minister Carwyn Jones met senior officials from the Sapa group during his visit to Norway in January and the Welsh Government said he pressed the business case for bringing the investment to Wales.
Economy and Infrastructure Secretary Ken Skates said: “The Welsh Government is proud to have supported Sapa’s extensive investment in the refurbishment of its site in Bedwas which will create at least 130 jobs over the next five years.
“Wales has a growing reputation for supporting innovative new technologies and opportunities, and the Low Carbon Vehicle sector is a particular growth area and a key sub sector for our advanced materials and manufacturing industry.”
John Thuestad, business area president of Sapa, said: “This is great day for both Sapa and manufacturing in Wales
“Sapa had to end extrusion operations in Bedwas in 2014 due to overcapacity in the market, but we are now pleased to be able to return to Wales with our new automotive components business.
“This is a good example of how industrial companies such as Sapa are growing in advanced markets fuelled by demands for lighter vehicles and more sustainable materials.”