Vedanta Resources has exited the bidding race for Rio Tinto's Canadian iron-ore assets, citing financial issues.
Iron Ore Company of Canada (IOC) is one of several assets that Rio Tinto is planning to sell in order to cut surging debts of $19bn and close down non-profit making operations in order to retain its single-A credit rating.
Earlier this year, Rio Tinto hired investment banks Credit Suisse and thr Canadian Imperial Bank of Commerce to sell its 59% stake in IOC, which is valued at approximately $4bn.
UK-listed Vedanta had shown interest in Rio Tinto's Canadian assets in March 2013 and submitted its bid in the first round along with Glencore Xstrata PLC and private-equity firm Blackstone Group.
As of 31 March, the company had huge debts of $16.7bn and a part of this debt was because of its acquisition of a 58.5% stake in Cairn India for $8.76bn in 2011.
A source told The Wall Street Journal that the acquisition would add to Vendata's financial burden.
Initially, Rio Tinto received bids for the stake from 13 to 15 firms, of which it shortlisted six.
IOC, the largest iron ore producer in Canada, has a capacity to produce approximately 22 million tonnes of iron ore concentrate per year.
Last month, Rio Tinto cancelled its plans to sell its $1.3bn diamonds business after failing to find a potential buyer.
Image: Iron Ore Company of Canada was been put up for sale earlier this year. Photo: Rio Tinto Company.