Rio Tinto plans to list Canadian iron ore unit in early 2019 -sources

Labrador Iron Ore Royalty

24/12/2018 15:57

By John Tilak, Joshua Franklin and Barbara Lewis
    Dec 24 (Reuters) - Anglo-Australian miner Rio Tinto  RIO.L 
 RIO.AX  is preparing to take its Iron Ore Company of Canada
business public in the first half of 2019 by dual-listing it in
New York and Toronto, people familiar with the situation told
Reuters.
    The company has hired investment banks Royal Bank of Canada
 RY.TO , Credit Suisse  CSGN.S  and JPMorgan Chase  JPM.N  to
lead the IPO, according to sources who spoke on condition of
anonymity as the information is not public.
    Rio Tinto, the world's second-biggest listed miner, is
targeting a valuation of about $4 billion, they said. 
    While Rio did not see much traction with a sale process, it
has not ruled that out, the people said.
    The IPO plans would depend on market conditions improving,
the people added. 
    With high levels of volatility, global markets have fallen
because of concerns about geopolitical risks and economic
growth. 
    A spokesman for Rio declined to comment.
    With operations in Labrador and Newfoundland, Iron Ore
Company of Canada is a major producer of iron ore in the
country. Rio Tinto owns a 58.7 percent stake, Japan's Mitsubishi
Corp  8058.T  owns 26.2 percent and Canada's Labrador Iron Ore
Royalty Co  LIF.TO  owns 15.1 percent. IOC reported revenue of
$1.9 billion in 2017.
    Rio has tried, and failed, to monetise Iron Ore Company of
Canada in the past and is keen to get it right this time, the
sources said.
    Rio tried unsuccessfully to sell its IOC stake in 2012-13. 
    This year it said it had also been unable to close a sale of
its stake in the Simandou iron ore project in Guinea.
 urn:newsml:reuters.com:*:nL3N1X9046
    Iron ore, which accounts for most of Rio's profit and is
used in making steel, has provided healthy margins for years but
the outlook is uncertain as major buyer China is expected
increasingly to rely on recycling rather than importing raw
material.
    Following a commodity price crash in 2015, Rio put a range
of assets on the block, mostly coal, to cut its debt. 
    In iron ore, its push to refocus on its best assets has
meant concentrating on Australia's Pilbara region, where it has
low costs and relatively high grades.
    Labrador Iron Ore Royalty Corp also provides relatively
unpolluting iron ore concentrate and pellets, which command a
premium.  urn:newsml:reuters.com:*:nL5N1UV0CX
    The accelerated IPO plans for Rio Tinto underscore an
eagerness among potential IPO candidates to get out to market
early in 2019 amid fears market conditions could sour later in
the year. 
    In the tech world, ride-hailing companies Uber Technologies
and Lyft Inc have both filed with the U.S. Securities and
Exchange Commission (SEC) and could go public in the first half
of 2019. 

 (Reporting by John Tilak in Toronto, Joshua Franklin in New
York, Barbara Lewis and Clara Denina in London; editing by Jason
Neely)
 ((john.tilak@thomsonreuters.com; 1-416-687-7918; Reuters
Messaging: john.tilak.reuters.com@reuters.net))