REFILE-UPDATE 6-Rio sells U.S. food packaging unit for $1.2 bln

* Sale to U.S. co. Bemis Co includes at least $1 bln cash

* Sources says Amcor still in race for other assets

* Rio shares down in weak metals market, Bemis shares gain (Refiles to add dropped quotation mark, paragraph 18) (Adds quote from CEO interview; updates share prices)

By Denny Thomas and Michael Erman

SYDNEY/NEW YORK, July 6 (Reuters) - Global miner Rio Tinto (RIO.AX) further improved its cash position on Monday by selling a part of its food packaging business to Bemis Co (BMS.N) for $1.2 billion in a deal that makes Bemis by far the largest North American player in a still fragmented industry.

Rio Tinto, which only last week raised $15.2 billion in one of the world's biggest rights issues, will sell its Food Americas flexible packaging assets to U.S.-based Bemis for $1 billion cash, with the rest in equity.

"Any packaging assets that Rio is getting rid of on its balance sheet is good," Olivia Ker, a research analyst at Merrill Lynch, said after the news. Monday's announcement takes Rio's expected proceeds from asset sales this year to $3.7 billion, and analysts say Rio would be encouraged to sell other noncore assets in the coming days.

"The rest of the packaging business is certainly on the cards, the rest of the coal division is still on the cards," Ker added.

The deal moves Rio Tinto closer to extricating itself from near-disastrous consequences of its 2007 acquisition of Canadian aluminum and packaging company Alcan. Bought near the height of the commodities boom, Alcan left Rio Tinto with $38 billion in debt. Rio Tinto had hoped to repay some of the debt by quickly selling the packaging assets, but the global financial crisis delayed that plan as asset prices tumbled.