UPDATE 1-Rio hires banks for Canada iron ore miner sale -sources
LONDON, March 1 (Reuters) - 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 owns 59 percent of Iron Ore Company of Canada (IOC), but 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.
In iron ore, this has meant concentrating on Australia's Pilbara region, where it has lower costs and higher grades.
Rio's new chief executive said last month the company would look for value from non-core assets. The company already has several businesses on the block, including its diamonds arm and aluminium assets in Australia and New Zealand.
"The historic performance has been inconsistent, and if Rio wants more bang for its buck, the Pilbara is lower cost than Canada, which is also lower grade," said one industry source.
He said a deal could value IOC at $3 billion to $4 billion, putting the value of Rio's majority stake at above $1.8 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 familiar with the matter said.
Rio's move to sell its IOC stake follows steelmaker ArcelorMittal's sale of a 15 percent stake in one of its iron ore operations in Canada, raising $1.1 billion to help pay off debt. Arcelor sold the stake to a consortium including South Korean steelmaker POSCO. Continued...