Rio Tinto Tuesday recommended China-backed Yancoal as the buyer of most of its Australian coal mines, rebuffing a surprise higher bid from commodities giant Glencore earlier this month.

The world's second-largest miner said in January it was selling Coal & Allied to Yancoal Australia -- majority-controlled by China's Yanzhou Coal -- for US$2.45 billion.

But Glencore, which like Yancoal also operates numerous coal mines in Australia, offered US$100 million more for the assets -- in New South Wales state -- earlier this month.

Rio said it spoke to both parties but still favoured Yancoal since the deal was expected to be completed faster due to greater funding and regulatory certainty.

Yanzhou Coal is one of China's largest mining groups by market capitalisation.

"We believe Yancoal's offer to purchase our thermal coal assets for US$2.45 billion offers the best value and greater transaction certainty for shareholders," Rio's chief executive Jean-Sebastien Jacques said in a statement.

"Yancoal's revised offer is the most attractive because it removes the deferred payment structure, can meet the timeline we have set for the transaction, and has given us certainty regarding the outstanding regulatory approvals required."

Under the original proposal, Yancoal was to pay an initial sum of US$1.95 billion and the rest as deferred payments, but would now make a single payment of US$2.45 billion, Rio said.

Yancoal had already been given the green light by Australia's Foreign Investment Review Board, while the Glencore plan was subject to Australian regulatory approval.

Dual-listed Rio said it would put the Yancoal offer to shareholders in Britain and Australia later this month, with the transaction expected to be completed by the third quarter of this year.

Rio, which in February reported a surge in annual net profit thanks to improving commodity prices, is selling Coal & Allied in a divestment drive which analysts expect will lead to a complete exit from the sector.

Yancoal operates several mines across Australia including in New South Wales, while Glencore operates 18 open-cut and underground coal mines across the country.

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