Three bidders out as Rio faces lacklustre Canadian sale - sources

Tue Aug 6, 2013 3:19pm EDT
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* Second-round bids below Rio expectations - sources

* Blackstone, Apollo, Glencore out of running - sources

* Rio to report earnings on Aug. 8

By Anjuli Davies and Clara Ferreira-Marques

LONDON, Aug 6 (Reuters) - Three big-name bidders for Rio Tinto's majority stake in Canada's largest iron ore producer are now out of the running, sources familiar with the talks said on Tuesday, after offers came in well below the mining group's targets.

The sources said private equity firm Apollo, which had been working with Canadian pension fund CPPIB, rival Blackstone and commodity trader and miner Glencore were no longer in the race after a second round of bids last month.

The low offers, at a time when dozens of mining assets are for sale and demand for steelmaking commodities is uncertain, raise questions over the future of a sale that could still take months to tie up - should Rio decide to push ahead.

Rio has a handful of assets on the block as it battles to cut a $19 billion debt burden and meet cost cutting targets. Like other miners seeking to divest unwanted activities, however, it has found buyers unwilling to pay up and in June was forced to scrap the sale of its $1.3 billion diamond business, 15 months after it was first announced.

Rio appointed banks to sell its 59 percent stake in Iron Ore Company of Canada (IOC) earlier this year after deciding to focus its iron ore efforts on assets in Australia's Pilbara region, where the world's second-largest iron ore producer has lower costs and higher grades.   Continued...