Glencore, the secretive Swiss-based commodity trader, is edging closer to a deal that could see it buy a Colombian coal mine from Xstrata for more than $2bn (£1.2bn), according to bankers in London.
The prospect of a deal could stoke speculation that Xstrata is seeking funds to enable it to sweeten its offer for Anglo American, a rival miner headed by Sir John Parker. Glencore is Xstrata's biggest shareholder with 35%.
Recently, the Takeover Panel imposed a deadline of 20 October for Xstrata to make a firm bid for Anglo, or walk.
Xstrata is yet to make a decision about Anglo, but no matter what it decides, Glencore is expected to acquire the Prodeco mine to take advantage of the strong run up in commodity prices.
Prodeco was originally owned by Glencore, but Xstrata bought it from the Swiss company earlier this year as part of a complex arrangement that was designed to allow Glencore to participate in Xstrata's £4bn rights issue.
Xstrata's shareholders were convinced that the sale price of $2bn was too low and that Xstrata's chief, Mick Davis, was affording Glencore preferential treatment. The deal that was eventually approved gave Glencore the option of buying back Prodeco at the fixed price of $2.25bn by 18 March 2010.
Now there is speculation that Glencore and Xstrata have discussed the possibility of the Swiss company exercising what is in effect a put option. Glencore's financial position has improved markedly over the last six months, say analysts, and it could afford to buy Prodeco.
Observers say that Xstrata could use the proceeds to help fund a bid for Lonmin, the platinum producer, where it emerged with a 25% stake after a failed bid in October 2008.
Some question whether Xstrata can afford to acquire Anglo for the cash premium that many of the target's shareholders have been demanding. In June, Xstrata proposed a nil premium merger to create a combined group worth £40bn, but this was rejected by Anglo and many of its big investors.
In August, Parker replaced Mark Moody-Stuart as chairman and declared his support for Anglo's embattled chief executive Cynthia Carroll who was criticised in the City for axing the dividend and buying assets at the top of the cycle.
Glencore was founded in 1974 by Marc Rich, an international commodities trader, but it is now run by Ivan Glasenberg, a tough South African commodities investor.
There have been rumours that Glencore is exploring a stock market listing, possibly in London, as it reviews its partnership structure.
Glencore trades oil, metals and agricultural commodities, and controls mines and smelters on five continents. But it has always been a difficult company to penetrate. Its website says: "As a privately owned company, Glencore restricts access to its detailed financial information." However, its secrecy would have to change if it became a plc.