Rio Tinto seeks buyer for stake in Canada's biggest iron ore company

Global miner Rio Tinto has appointed investment banks Credit Suisse and CIBC to sell its majority stake in Canada’s largest iron ore producer, two sources familiar with the matter said.

Rio – the world’s second-largest producer of iron ore – has been focusing on its core assets at a time of sluggish demand and weaker prices. Its new chief executive said last month the company would look for value from non-core operations.

The company already has several assets on the block, including its diamonds arm and aluminium assets in Australia and New Zealand.

Rio owns 59 per cent of Iron Ore Company of Canada (IOC). The Wall Street Journal, citing people familiar with the matter, said an eventual price tag could be over $1.7-billion.

“For Rio, it makes sense. They tried to sell it six years ago, and it has never been a core asset. Now is not a bad time to sell,” one of the sources told Reuters.

While iron ore assets up for sale are plentiful at a time of rising costs and uncertain economic prospects, few of these are producing. IOC, however, has been producing since 1954.

Rio’s move to sell its IOC stake follows steelmaker ArcelorMittal’s sale of a 15-per-cent stake in one of its iron ore operations in Canada earlier this year, raising $1.1-billion to help pay off debt. Arcelor sold the stake to a consortium including South Korean steel maker POSCO.

The shares in IOC not owned by Rio are held by Mitsubishi, which has a 26-per-cent stake, and Labrador Iron Ore Royalty Income Corporation.

A Rio spokesman declined to comment.