Rio Tinto plc (NYSE:RIO) (LON:RIO) is planning to sell off its Canadian iron-ore operations in order to cut costs and improve its balance sheet.

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Rio Tinto holds a 58.7 percent stake in Iron Ore Company of Canada (IOC) and has hired Credit Suisse Group AG (NYSE:CS) and Canadian Imperial Bank of Commerce (TSE:CM) (NYSE:CM) to dispose of all or part of its stake. The stake in IOC, which sells to North America, Europe and Asia, is valued at $1.8bn by Investec Bank (Australia). Japan’s Mitsubishi Corporation owns 26.2 per cent of IOC, while the remaining 15.1 per cent is controlled by Labrador Iron Ore Royalty Income Corporation.

The company had already pocketed about $12bn from divesting more than 20 projects, told CEO Sam Walsh last month. The CEO also revealed that the company would continue with disposals. Mr Walsh took over as the CEO of the company on January 17, after his predecessor, Tom Albanese, resigned following a $14bn write-down on the value of takeovers.

“I’ll be looking at existing projects with a fresh pair of eyes and considering all alternatives,” Mr Walsh said. “These could include continuing with the current plan, slowing it down, introducing new partners or cancelling projects altogether.”

Rio Tinto plc (NYSE:RIO) (LON:RIO) website reveals that, at current production rates, IOC’s reserves are sufficient for more than 20 years.  The company has a pellet-making plant at Labrador City, Newfoundland and a 420km-railway and port at Sept-Iles on the Gulf of St Lawrence, which it acquired in 2000 in the takeover of North.

“IOC’s ore is mainly sold to contract buyers, which are mostly the major Chinese mills,” said Lu Xiaojing, a Shanghai-based analyst at researcher Mysteel.com. “If IOC is looking for potential buyers in China, big steel makers are [the most] likely [targets].”

It has become a general trend among Mining companies globally to sell under-performing assets i order to compensate for rising costs and to cut on debt. Rio Tinto is also planning to get rid of its diamond and aluminum assets, including an announcement in December to sell its 57.7 percent stake in Palabora Mining, in South Africa, for $373 million.

“Everything and anything is on the table,” Mr Walsh said at the investor conference in response to a question on the possible sale of IOC. “If there is somebody out there who wants to value a project greater than we do, then we’ll certainly consider that.”

“But in response to IOC or in response to any particular asset, we’re not going to make any comment.” David Luff, a Melbourne-based Rio Tinto spokesman said as he refused to comment on the speculation.