May 12 (Reuters) - Norway's sovereign wealth fund,

managed by Norges Bank Investment Management (NBIM), has decided

to actively engage with mining companies Rio Tinto and

South32 ( SHTLF ) regarding their environmental practices, the

fund operator said on Sunday.

The executive board of the largest sovereign wealth fund in

the world said it arrived at this decision following a

recommendation to sell its stake in the companies from the

Council on Ethics, an independent adviser appointed by the

government of Norway.

The fund owns an about 2.5% stake in Rio Tinto PLC ( RIO ),

0.13% stake in Rio Tinto Ltd ( RTNTF ) and a 2.6% stake in

South32 ( SHTLF ), according to LSEG data.

The council pointed to concerns over the companies'

involvement in the Mineração Rio do Norte (MRN) joint venture, a

significant bauxite mine in the Amazon rainforest.

The executive board of the wealth fund said in a statement

it decided to engage with the companies on their work to reduce

serious environmental damage over a period of five to 10 years.

The Mineração Rio do Norte is a joint venture between

Glencore ( GLCNF ) which owns a 45% stake, Rio Tinto with a 22%

stake and South32 ( SHTLF ), which owns a 33% stake.

Seperately, the fund said it revoked the exclusion of German

energy firm RWE AG, commending its shift towards

renewable energy.

Meanwhile, it said decided to sell its shares in Mexican oil

company Petroleos Mexicanos and Israeli firm Paz Retail and

Energy, citing ethical concerns.