Mining giant Rio Tinto said on Wednesday it is selling its stake in an Australian coal mine for US$606 million to New Hope Group, as slowing demand from China hits commodity prices hard.

Rio said it had reached an agreement to sell its 40 percent stake in Bengalla mine, in the Hunter Valley some 250 kilometres (155 miles) north of Sydney, to Australian-listed New Hope, part of asset divestments totalling US$4.5 billion since January 2013.

The sale is expected to be completed by early 2016 and comes as the price of key raw materials continues a downward spiral on the back of softening demand from China, the world's biggest commodities consumer.

The slump has hit a number of big resources companies, including mining giant Glencore, whose shares have lost three quarters of their value since listing in 2011.

"This sale will deliver value for our shareholders as we remain focused on continuing to develop the strongest core portfolio of assets in the mining industry," Rio Tinto's copper and coal chief executive Jean-Sebastien Jacques said in a statement.

Rio shares were up 2.32 percent to Aus$47.60 and New Hope shares rose 3.94 percent to Aus$1.72 in mid-day trade.

The Bengalla mine is the smallest of three coal mines in the Hunter Valley that the Anglo-Australian miner has an interest in through Coal & Allied.

As part of the sale, Rio said it would move to hold 100 percent of Coal & Allied, with 20 percent Coal & Allied stakeholder Mitsubishi Development shifting to a direct 32.4 percent interest one of the three mines.

New Hope said the purchase of Bengalla, a large-scale open cut mine that produces about 8.6 million tonnes of high-quality thermal coal annually, showed the firm's positive long-term outlook in the global export market.