NEW YORK ( TheStreet) - Rio Tinto ( RIO) is struggling to sell its majority stake in the Clerment coal mine in Australia after three bidders submitted offers below expectations. Rio hopes to use proceeds from the sale of its 50.1% stake to lower its $19 billion worth of debt.
The Wall Street Journal reports the three bidders -- Adani Enterprises, Trafigura Beheer and New Hope -- put forth offers no higher than $850 million.
Rio Tinto shares are down 1.3% to $48.84 as of 2:17 p.m. EST. The miner is lagging the S&P 500 which is down 0.49%.
Softer demand in China for metallurgical coal, heavily used in steel production, has caused coal prices to slump.
Disappointing manufacturing data out of China for September further depressed mining and energy shares. BHP Billiton (BHP) shares are 0.48% lower to $66.83, Halliburton Company (HAL) has lost 0.23% to $48.28, and BreitBurn Energy (BBEP) is down 0.05% to $18.30, as of 2:17 p.m. EST.
'Real Money' contributor Jim Jubak says surplus will further depress commodity prices and affect the profitability of many in the mining space. "Australia alone is projected to add 140 million metric tons of new capacity over the next two years," he says. "It's hard to see how that extra capacity won't push iron ore prices lower."
Written by Keris Alison Lahiff.