Rio Tinto sells 40pc stake in coal mine

Rio has been looking to offload less profitable businesses to help fund its promise to raise dividends and focus on iron ore and copper mining amid a broad slump in commodities prices caused by slowing economic growth in China.

Bengalla is the smallest of three coal mines in the Hunter Valley near Sydney in which Rio Tinto is a stakeholder. It produced 8.6 million tonnes of coal in 2014.

New Hope, capitalised at A$1.37 billion ($959m), said last week it was hunting for acquisitions after reporting a 25 per cent rise in annual profit as cost cuts outweighed a drop in energy coal prices to six-year lows.

Analysts at Macquarie and Morgan Stanley said Rio had fetched a strong price for the Bengalla stake relative to their valuations of its coal assets.

Rio earlier this year put all its coal stakes in the state of New South Wales up for sale.

Glencore is still seen as a front runner for the remaining stakes, despite concerns over its $30bn debt pile, as it has mines in the same area that it has long sought to combine with Rio’s to help cut costs.