Glencore Xstrata and Miners Rio Tinto have already discussed plans that would join the two thermal coal assets in Australia. The two battled over low prices and high costs for said deal according to sources familiar with the plan.

On Tuesday, the same source said both companies think that the intermediate outlook will be challenging.

Rio Tinto refused to give comments for the said report. Glencore also remained mum.

A coal joint venture would help the two firms cut down the workforce and avoid more expensive operations.

A report issued on Wednesday by RBC Capital Markets said that Rio Tinto Coal Australian unit costs have increased in multiple to US$133 a metric ton from 2005. About one third of the said increase was because of the Australian dollar rise.

Andrew Harrington, analyst at Patersons Securities said that the combining of Rio and Glencore's port and rail capacity could intensify competition issues. China antitrust authorities also took a dim view when a venture between Rio and BHP Billiton engaged in a similar deal.