Rio Tinto (LON, ASX, NYSE:RIO), the world’s second-biggest producer of iron ore, is said to have cancelled plans to sell its Iron Ore Company of Canada (IOC) business after failing to settle on a suitable price with potential buyers.
The miner, which owns 58.7% of IOC, had also explored and listing the unit on the Toronto Stock Exchange, but earlier this year told the banks leading the process to stop it, the Wall Street Journal reported.
Iron Ore Company of Canada (IOC) produces relatively unpolluting iron ore concentrate and pellets, which command a premium.
This was not the first time Rio
attempts to offload its interest in IOC, one of Canada’s largest iron ore
producers. In 2013, then chief executive Sam Walsh tried, but failed to sell it as part of a massive
assets disposals the company went through at a time of slumping iron ore
prices.
The IOC’s mine in Newfoundland and Labrador produces relatively unpolluting iron ore concentrate, which command a premium. The company also runs a concentrator, a pelletizing plant, which produces small balls of iron ore used in the production of steel.
Additionally, IOC operates port
facilities located in Sept-Îles, in the province of Quebec and runs a
418-kilometre railroad that links the mine to the port.
Japan’s Mitsubishi Corp and
Canada’s Labrador Iron Ore Royalty Co also have stakes in IOC — 26.2% and 15.1%
respectively.
Iron ore, which accounts for most
of Rio’s profit, has provided healthy margins for years.