Exclusive: Goldman front-runner for Vale's Colombian coal ops

Vale - which paid $306 million in 2008 for the mines, railway and port - has struggled to drum up much interest in the assets because its price expectations - which were to at least match what they paid - were too high, the sources said.

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"Goldman Sachs looks the most likely to buy it, they probably will if they over pay, as Vale did originally," one senior industry source told Reuters.

The Vale auction process is expected to finish by the end of February, the sources said. Vale executives said in December that they hoped the sale would be agreed early in 2012.

"Vale closes (the process) soon. Goldman Sachs is in there. They're very interested," said a source close to the companies.

Vale is selling its Colombian assets because they are relatively small and high-cost mines versus the large operations of Cerrejon, Drummond and Glencore and they are not core assets for Vale's business.

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Graphic on Colombian output, exports: http://r.reuters.com/cyq87r

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Vale's reserves are too small and made up of mostly low quality coal to justify a price tag of $300 million, said sources who have looked at the Vale assets.

"The reserves are fairly poor and not large by any means," another industry source said.