UPDATE 1-W.Australia premier says raised Rio case with China

* Shanghai mayor to pass Australian concerns to authorities * Chinese firms welcome to invest in West Australia * Chinese firms can take minority stake in major projects (Adds details) SHANGHAI, July 21 (Reuters) - Western Australia's premier said on Tuesday that he had raised the issue of Rio Tinto's (RIO.L) staff detentions with the mayor of Shanghai, as Australian politicians continue to try and press the case without damaging trade ties. "The mayor indicated to me that he would pass my concerns to the relevant authorities," Colin Barnett told reporters after his meeting with Shanghai mayor Han Zheng. Chinese authorities earlier this month detained four Rio Tinto (RIO.AX) employees, including its top iron ore salesman in China, Australian Stern Hu, alleging they were involved in stealing state secrets. Rio has defended its employees, saying claims they bribed Chinese steel mills were unfounded. Australia's Foreign Minister Stephen Smith said on Tuesday he would raise China's detentions with his Chinese counterpart at a regional security meeting in Thailand. Smith said he hoped to meet China's Foreign Minister Yang Jiechi at this week's Association of Southeast Asian Nations Regional Forum in Phuket in what would be the highest-level meeting yet on a case that has strained Australia-China ties. The Australian government and Rio have said the detentions will not affect trade, but an influential opposition lawmaker has warned the detentions could result in tighter laws covering investment in Australian resource firms by entities controlled by foreign governments, including state-owned Chinese firms. Australian Trade Minister Simon Crean, who was recently in Shanghai, also expressed "strong concern" to the Shanghai city government regarding Hu, and that Australia hoped the issue would be dealt with quickly. Crean was also told his concerns would be passed to relevant authorities. Barnett said Chinese firms were welcome to invest in the state of Western Australia. They could take a minority stake in major projects and a larger stake in small projects, he said. In June, a $19.5 billion plan for Chinese state-owned aluminium firm Chinalco to substantially increase its stake in Rio collapsed when Rio joined forces with BHP Billiton's iron ore operations. China is Australia's biggest trade partner, with trade worth $53 billion last year. Iron ore exports injected $14 billion of that, led by Rio Tinto and BHP Billiton Ltd (BHP.AX) (BLT.L). (Reporting by Alfred Cang and Lucy Hornby, Editing by Jacqueline Wong)