The Daily Telegraph

Two of Britain's largest companies are looking to expand in Colombia with takeover deals. Xstrata, the mining company, is understood to be interested in buying Drummond, Colombia's Second-biggest coal miner. Familyowned Drummond, which could change hands for around $8bn (£5bn), was put up for sale last year.

Meanwhile, reports yesterday suggested that British American Tobacco is pursuing an offer for Colombian cigarette group Protabaco, whose brands include Mustang and Premier. Protabaco could be worth more than £270m.

Bank of AmericaMerrill Lynch has been running the auction of Drummond.

Several other mining giants - such as Rio Tinto, Vale, Vedanta Resources and Essar - are said to have been interested in Drummond. However, reports yesterday suggested Xstrata is now in pole position to buy the Colombian coal mining business as it was the only suitor to table a fully financed offer by last month's deadline.

Coal has recently become a sought-after commodity by the mining majors. Rio Tinto, for example, recently entered into a deal to acquire Mozambique-based coal group Riversdale Mining for £2.5bn.

If Xstrata does secure a deal to acquire Drummond, it would be the company's first large acquisition since it was forced into a deeply discounted rights issue two years ago.

There could, though, be complications with the transaction as Glencore, Xstrata's largest shareholder, already has coal interests in Colombia.

Xstrata and British American Tobacco both declined to comment.

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