The sale comes hot on the heels of another agreement earlier this week for Glencore (LN:GLEN) to acquire Rio's Hail Creek and Valeria assets, also in Queensland, for $1.7 billion.

Rio CEO Jean-Sebastian Jacques said the agreement was "the best option for the future development of the project while delivering attractive value for Rio Tinto as we continue to streamline our portfolio".

The deal is expected to close in the June quarter, subject to regulatory approvals from Australia's Foreign Investment and Review Board and the Queensland Government. Some $150 million is payable upon completion of the transaction, with the remaining $50 million to be paid a year later.

Winchester South is in the northern Bowen Basin, approximately 30km southeast of the Moranbah township. It contains 356 million tonnes of resources and, once developed, is expected to produce coking and thermal coal.

Rio said a separate process was underway to sell its interest in its last remaining Australia coal asset, the Kestrel underground mine.