Anglo-Australian miner Rio Tinto has hired investment banks Credit Suisse and Canadian Imperial Bank of Commerce to sell its majority 59.7-per cent stake in Iron Ore Company of Canada (IOC), the country's largest iron ore producer, Reuters yesterday reported, citing two sources familiar with the matter.

A potential sale could value IOC at $3 billion to $4 billion, putting the value of Rio's stake at over $1.8 billion, said the report.

Other stakeholders in IOC are Japan's Mitsubishi Corp with 26.2 per cent and Labrador Iron Ore Royalty Income Corp with 15.1 per cent.

The London-based miner's newly appointed CEO, Sam Walsh had earlier said that he would sell non-core and under-performing assets in order to bolster the balance sheet of the company.

Rio Tinto, which last month wrote down $14-billion in the company's 2012 results on its Mozambique and aluminum assets, has already put its diamond and Pacific aluminum assets on the block (See: Rio Tinto CEO quits after $14-bn write-down).

But Rio Tinto, which generates four-fifths of its earning from iron ore, may be selling IOC, which has a lower grade of ore, and focus on the higehr grade ore at Pilbara in Australia and its under development massive Simandou iron ore mine in Guinea.

IOC is the largest manufacturer of iron ore pellets in Canada and its customer are North America, European and Asian steel producers.

The company operates a mine, concentrator and a pellet plant in Labrador City, Newfoundland and Labrador, as well as port facilities located in Quebec. It also operates a 418km railroad that links the mine to the port

IOC has recently spent $800 million in expansion in order to increase annual iron-ore output capacity to 26 million tons, but even that is nowhere near the 353 million tons that Rio Tinto plans to extract annually from the Pilbara by mid-2015.

IOC contributed $230 million net profit to Rio Tinto in 2012, compared to $9.2 billion for the whole of its iron ore operations.

The potential sale comes a few months after steel giant ArcelorMittal sold a 15-per cent stake in Canada's Labrador Trough iron ore mining to a consortium led by South Korean steelmaker Posco for $1.1 billion and a 20-per cent stake in Baffinland Iron Mines to its joint venture partner Nunavut Iron Ore.