SYDNEY, Australia (

TheStreet

) -- Australia's

Riversdale Mining

said it has been approached by

Rio Tinto

(RIO) - Get Report

about a takeover at 15 Australian dollars a share ($14.81), or $3.5 billion.

"These discussions were undertaken in confidence and Rio Tinto advised the company that it is not in a position to submit a proposal for the potential acquisition of the company," Riversdale said in a statement on its Web site Monday.

Rio's discussions with Australia's Riversdale could set off a bidding war.

Reuters

reports Riversdale has hard coking-coal projects in Mozambique that could eventually supply 5% to 10% of the global market for the steel-making material.

Brazil's

Vale

(VALE) - Get Report

is seen by analysts as the most likely rival bidder, as it already has coal mines nearby in Mozambique,

Reuters

reports.

India's

Tata Steel

, Riversdale's top shareholder, was also seen as a potential bidder, as were

Xstrata

,

Anglo American

and

Peabody Energy

(BTU) - Get Report

.

"While discussions with Rio Tinto are ongoing, there is no certainty that Rio Tinto or any other party will proceed with any proposal for the acquisition of Riversdale," Riversdale said Monday.

Rio Tinto has yet to comment on the talks.

-- Written by Joseph Woelfel

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Joseph Woelfel

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