Variety reports that the Oscar winning actor is in final talks to play the villain in "Iron Man 3," director Shane Black's first entry into the Marvel Universe with returning leading man Robert Downey Jr. in tow.
As for who the actor will play, that's still very much up in the air. What is clear, apparently, is that Kingsley is not playing the Mandarin. Despite the fact that the character stands out as Tony Stark's number one nemesis in the comic books, not to mention numerous teasers about the Ten Rings organization throughout previous "Iron Man" movies, Variety cites insiders as saying that Mandarin won't be the big bad this go around.
Variety believes it's more likely that Kingsley's character will come from Warren Ellis' six-issue "Iron Man: Extremis" arc. That's supposedly the foundation of the third "Iron Man" movie, and if that's the case, one of the likelier (if not flashier) candidates is Aldrich Killian, who co-created the Extremis technology that Iron Man eventually adopts, but only after Killian sells the tech to terrorists.
Source: Splash Page