BHP, Rio looking into Australian coal JV - report

LONDON (Reuters) - Mining groups BHP Billiton and Rio Tinto are considering linking up their Australian coal operations following a deal to create a joint venture in iron ore, Australia's Herald Sun newspaper said.

Quoting industry sources, the newspaper said on its website that the two firms were looking into combining their coal operations in Queensland and New South Wales.

BHP and Rio declined to comment.

The newspaper said the two groups were under pressure following a "merger of equals" proposal by Anglo-Swiss rival Xstrata to Anglo American.

"A marriage of Xstrata and Anglo would topple BHP from its position as Australia's biggest coal miner," the Herald Sun said.

BHP, the world's biggest mining company, is the largest producer of coal used for steelmaking.

BHP and Rio announced a deal on June 5 to create a joint venture with their iron ore operations in Australia.

Rio and BHP, the world's second and third biggest iron ore producers respectively, expect to generate savings of $10 billion (6.14 billion pounds) from the venture.

(Reporting by Eric Onstad)