Nathaniel Rothschild's Vallar investment vehicle will do battle with FTSE-100 giants BHP Billiton, Rio Tinto, Anglo American and Xstrata for the $7bn (£4.6bn) Colombian operations of coal miner Drummond.
The US group is selling out of Colombia and its adviser, Bank of America Merrill Lynch, is expecting first round bids this week. Other potential bidders include Swiss commodities trader Glencore and coal miner Peabody Energy, which is listed on the New York stock exchange.
Drummond, Colombia's second biggest coal exporter, announced in the summer that it was looking for a partner to develop its assets in the country, but it is understood to have decided to sell out entirely.
Sources said that the sale could raise between $5bn and $7bn. The move would allow Drummond, which is led by the eponymous family, to concentrate on its US coal business.
Vallar's emergence as a contender will intrigue the market, and if it were to succeed against mining's big names it would be an astonishing coup. Mr Rothschild and James Campbell raised £707m when they launched Vallar on the London Stock Exchange in July. The duo set up Vallar to find coal and iron ore opportunities and has sufficient equity to secure loans for major deals. Mr Campbell previously led Anglo American's expansion into Colombia, Australia and Venezuela.
If BHP succeeds, it would show that its chief executive, Marius Kloppers, is able to make major deals even though much of his time is taken up by his $39bn hostile pursuit of Canadian fertilizer group Potash Corporation of Saskatchewan.
Glencore might yet bid in conjunction with Xstrata. The Swiss group is a major stakeholder in Xstrata, and would like to eventually combine in a full-blown merger. However, Glencore is focusing on a stock market listing of its own, expected in mid-2011 at the earliest.
London-listed gold miner Petropavlovsk said on Friday that it would float its non-precious metals division in Hong Kong. The flotation is expected to be priced in early October. Its shares closed at 1160p on Friday, up 5 per cent on the start of the day's trading.Reuse content