Rio values IOC, the largest iron ore producer in Canada, at around $8bn and expects the sale of a 59% stake to fetch anywhere between $3.5bn and $4bn, reports Reuters, citing sources close to the deal.
The company has been divesting non-core operations as it struggles with weak demand, escalating costs, low prices and surging debts amounting to $19bn.
GlencoreXstrata, Essar and private-equity firm Blackstone Group are said to be among the potential companies eying to acquire the majority stake, the news agency reported.
Early this year, Rio Tinto hired investment banks Credit Suisse and Canadian Imperial Bank of Commerce to sell its majority stake in IOC and last month, the company received a list of 13 to 15 initial buyers.
Over the next few weeks, Rio expects more potential buyers, especially from China, to come forward.
IOC has a capacity to produce approximately 22 million tonnes of iron ore concentrate per year.
The company operates a mine, concentrator and a pellet plant in Labrador City, Newfoundland and Labrador, as well as port facilities located in Quebec.
In March 2013, two aboriginal groups filed a C$900m ($876m) lawsuit in Montreal's Superior Court against IOC for alleged environmental harm and displacing the local communities from their traditional areas.
Image: IOC has a capacity to produce approximately 22 million tonnes of iron ore concentrate per year. Photo: Rio Tinto Company.