Canadian firm Teck Resources is said to be bidding for Rio Tinto's majority stake in Iron Ore Company of Canada (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.
Iron Ore Company's operations are located in Labrador City in Newfoundland and Labrador, Canada's easternmost province.
Teck Resources is considered to be the second largest mining firm in Canada and one of the few remaining bidders for the controlling stake, reports Bloomberg.
Rio Tinto owns a 59% stake in IOC, while Labrador Iron Ore Royalty and Mitsubishi hold a 15% and 26% stake respectively.
IOC has a capacity to produce approximately 22 million tonnes of iron ore concentrate per year.
Earlier this year, Rio Tinto appointed investment banks Credit Suisse and the Canadian Imperial Bank of Commerce to offload its stake in IOC.
American private equity firm Apollo Global Management, Glencore Xstrata and private-equity firm Blackstone Group are said to be among the potential companies eying the majority stake.
Bloomberg's source added that Rio Tinto may not sell its controlling stake in Iron Ore Company as it has so far been disappointed with the bids. It has reportedly also considered selling the IOC's mining and infrastructure assets separately but later withdrew the plan.
Weak demand, escalating production costs and low prices have compelled several mining companies to implement cost reduction strategies across their operations.
Since the beginning of 2013, iron ore prices dropped by 24%, copper by 10% and thermal coal by 7%.
Anglo American is looking for partners in its Minas Rio project in Brazil, while BHP Billiton is looking for buyers for its mines in West Africa.
Image: IOC has a capacity to produce approximately 22 million tonnes of iron ore concentrate per year. Photo: Courtesy of Rio Tinto Company.