Sky News has learnt that Rio Tinto has hired Credit Suisse, the investment bank, to conduct an auction of its majority stake in Iron Ore Company of Canada (IOC).

Prospective bidders such as ArcelorMittal and Teck, the diversified mining group, are understood to have been sounded out in the last few weeks.

The move to offload its ‎58.7% stake in IOC, which employs more than 2,500 people and has capacity to produce 18m tonnes of iron ore concentrate annually, comes as part of a rationalisation of Rio's portfolio by Jean-Sebastien Jacques.

Rio is also considering an initial public offering on the Toronto Stock Exchange of IOC, on which Royal Bank of Canada has been hired to advise.

The possible flotation plan was highlighted in a report by the news agency Reuters last week.

Banking sources said on Wednesday that $6bn was a "high but not inconceivable" price for Rio to achieve through a sale process, with iron ore prices this month reaching their highest level since February.

A previous attempt by Rio to sell its IOC stake was abandoned in 2012.

Under Mr Jacques, who took over in 2016, Rio has accelerated an overhaul of its portfolio as stronger commodity prices have fuelled a return of cash to shareholders.

The company said a fortnight ago that more than $7bn would be handed back to investors through dividends and share buybacks.

If it proceeded with a sale of its IOC stake, it would be one of Rio's largest disposals for years‎, and represent another step in repairing relationships with major shareholders which had been fractured by the disastrous $38bn takeover of Alcan, the aluminium producer.

It drew a stinging response from some investors last year, however, when Sky News revealed that Rio was close to appointing Sir Mick Davis, the Conservative Party chief executive, as its new chairman.

Institutional shareholders were alarmed that the prospective appointment could signal a return to the acquisition-hungry approach which characterised the global mining industry of a decade ago.

The plan was eventually dropped, and Simon Thompson, an existing Rio board member, was named as the company's chairman instead.

It was unclear on Wednesday whether an auction of IOC would also include the stakes held by its other shareholders,‎ Mitsubishi and the Labrador Iron Ore Royalty Income Corporation.

Sources close to Rio said that if it went ahead with the IOC sale or flotation, it could potentially use the proceeds to pursue a number of smaller acquisition targets.

It was unclear if ArcelorMittal or Teck were interested in buying the IOC stake.

Under Mr Jacques, the company is increasingly focused on core assets such as its Pilbara iron ore operations in Australia and aluminium business in Canada.