After Tata Steel, Essar Steel is likely to join the race for Brazilian miner and steelmaker CSN's Nacionale Minerios (Namisa), a fully integrated iron ore company.
Sources close to the development said Goldman Sachs has approached Essar with the acquisition proposal and the company was considering it.
Goldman Sachs, which advised CSN during the takeover battle for Anglo-Dutch steel company Corus with Tata Steel last year, has been retained as its financial advisor for Namisa.
Successful bids by either Tata Steel or Essar would make them the first domestic companies to acquire a developed foreign mine.
Last year, Jindal Steel and Power acquired the Al Mutun iron ore mines in Bolivia but these are not developed. Industry observers peg the valuation at more than $2 billion. All the deals in the raw material space so far have been for exploration and prospecting licences.
An Essar spokesperson said, "As a group, we keep looking at growth opportunities, however, it is not our policy to comment on specific projects."
Essar, however, has been on an acquisition spree. The company, which has a current capacity of 8.5 million tonnes across domestic and international markets, is targeting a capacity of 20 to 25 million tonnes by 2012, but has no captive mines.
The only respite is the company's US acquisition of Minnesota Steel last year, which is said to have estimated reserves of over 1.4 billion tonnes on the Mesabi iron range in north-east Minnesota, which is yet to be developed.
Essar is also understood to be in the race for Indonesia's state-owned PT Krakatau Steel. Last year, the company acquired Algoma Steel Inc in North America and recently agreed to buy US-based Esmark.
However, Namisa is likely to be contested by steel companies from across the globe.
Currently, Namisa's iron ore sales and exports stand at 14 million tonnes and the plan is to take it to 40 million tonnes by 2012. Apart from the mining rights, Namisa has access to railway transport and ports.
Industry sources said CSN which has a net debt of more than $2 billion is looking to recover a large part from the sale of Namisa and the process was likely to be completed over the next six months.