IN its first foray into copper assets, China Molybdenum Co has agreed to buy an 80 percent stake in Australia's Northparkes mine from Rio Tinto for US$820 million.

Rio Tinto has been selling some smaller operations to bolster its balance sheet in response to weaker commodity prices. The Anglo-Australian mining company recently completed the divestment of the Eagle nickel project in the United States.

"Northparkes is a successful business but is not of sufficient size to be a good fit with our strategy," Rio Tinto Chief Financial Officer Chris Lynch said in a statement yesterday. "As always, any decision to sell is driven by our focus on delivering the best value for our shareholders."

The deal represents China Molybdenum's effort to diversify, analysts said. Luoyang, Henan Province-based China Molybdenum is a major producer of molybdenum and tungsten, used to harden steel.

Cathay Fortune, a major shareholder in China Molybdenum, has also been long involved in a potential takeover of Australia's Discovery Metals, another copper miner.

The Northparkes operation, in New South Wales state, produced about 54,000 tons of copper in 2012. Macquarie Group called Northparkes "a good performer on any measure except scale," adding it has significant expansion potential.

Rio's joint venture partners, Japan's Sumitomo Metal Mining and Sumitomo Corp Mineral Resources, which own the remaining 20 percent in Northparkes, have the right to match China Molybdenum's offer, Rio said.

China Molybdenum outbid companies, including Australian copper miner OZ Minerals, which had been seen as the most likely buyer but was under pressure from shareholders not to overpay.

Trading in China Molybdenum shares were suspended in Shanghai and Hong Kong yesterday.

The transaction is expected to close by the end of 2013, Rio said.