American private equity firm Apollo Global Management has submitted an offer to buy Rio Tinto's majority stake in Iron Ore Company of Canada (IOC), while China's state-owned mining company China Minmetals is also considering bidding for the asset.
Bloomberg has reported that Apollo has reached the second round of bidding for Rio Tinto's 59% stake in IOC.
Iron Ore Company of Canada is one of several assets that Rio Tinto is planning to sell as it attempts to cut surging debts amounting to $19bn and close down non-profit making operations in order to retain its single-A credit rating.
Earlier this year, Rio Tinto appointed investment banks Credit Suisse and Canadian Imperial Bank of Commerce to offload its 59% stake in IOC.
The company received initial bids from 13 to 15 firms, of which it shortlisted six.
IOC has a capacity to produce approximately 22 million tonnes of iron ore concentrate per year.
China Minmetals assistant president Wang Jionghui told The Wall Street Journal on Tuesday that the company is considering bidding for Rio Tinto's Canadian iron-ore operations and is 'watching developments'.
"We have invested in the neighborhood before, and we are familiar with the area," Jionghui added.
Minmetals has become the first Chinese firm to have shown interest in acquiring the majority stake in IOC.
Jionghui told the publication that the firm would pursue an active bid after considering several other issues such as partners.
GlencoreXstrata and private-equity firm Blackstone Group are said to be among the potential companies eying the majority stake.
Rio Tinto has been struggling with weak demand, escalating production costs and low prices, and recently called for final bids for its 80% stake in the Northparkes copper and gold mine in New South Wales.
Image: IOC has a capacity to produce approximately 22 million t of iron ore concentrate per year. Photo: Rio Tinto Company.