Mick Davis amasses $4.8bn war-chest for X2 mining deals
Former head of Xstrata defies slump in commodities market to secure a further $1bn of funding for mining startup X2 Resources
Mick Davis is on the prowl for deals with a near $5bn war-chest
By
Andrew Critchlow, Commodities editor
10:35AM BST 15 Oct 2014
Mick Davis, the former head of Xstrata, has amassed a $4.8bn (£3bn) war-chest to fund acquisitions for his new mining venture X2 Resources amid growing momentum behind M&A activity in the industry.
X2 Resources, which Mr Davis formed with colleagues from Xstrata after the coal miner merged with Ivan Glasenberg's Glencore empire, said that it has raised an additional $1bn from investors to fund deals.
"With almost $5bn in equity and access to significant additional debt funding, X2 Resources is uniquely positioned and
we are currently reviewing a number of opportunities in the metals and mining sector," said Mr Davis. "We will build on the team’s unparalleled track record of acquiring and integrating assets and supporting the management teams of acquired businesses to create value."
The identity of the investors is confidential but the Telegraph understands that it includes pension schemes and sovereign wealth funds.
News of the increased warchest comes a week after it emerged that rival Glencore had attempted an audacious $160bn merger with Rio Tinto, the world's largest shipper of iron ore. It also comes against a backdrop of sharply falling commodity prices. Iron ore is down 40pc this year adding to declines among most other industrial metals and coal.
Despite the overall concerns in the market, X2 Resources said that it was continuing discussions with investors to raise additional funds.
Large mining companies such as BHP Billiton and Anglo American are busy slimming down and parcelling off non-core assets and mines for sale as they seek to boost productivity and slash costs to compensate for falling prices.
X2 started raising capital in September last year when Hong Kong-based commodities trader Noble Group and private equity firm TPG together stumped up $1bn. At that time five cornerstone investors, who each committed $500m also conditionally agreed to provide another $250m.
Mr Davis is South African who took control of Xstrata in 2001 when it was valued at just $500m and, alongside some of X2’s management team, turned it into a business worth around $30bn. The X2 team includes former Xstrata finance director Trevor Reid and executives Thras Moraitis, Andrew Latham and Ian Pearce.
Mr Davis left the merged Glencore Xstrata with almost £75m, including share options.
