Former Xstrata CEO Davis gets a $1bn injection for new venture

After losing out in the Glencore takeover, former Xstrata chief executive Mick Davis is ready to come back to the industry and two major financial institutions are already backing him up.

Trading house Noble Group and American private equity firm TPG Capital said in a statement Monday they will each invest $500 million in X2 Resources, the private mining venture led by Davis.

The companies said X2 Resources aims to become a "mid-tier diversified miner and metals group", whose output would eventually be marketed by Noble, a Glencore's rival.

The firms also said they are discussing with “a further select group of potential investors” for the new venture.

It doesn’t seem a coincidence that the new company’s name is X2, as the venture appears to be a clear effort to replicate Davis’s success at Xstrata.

The team behind X2, which also involves former Xstrata finance director Trevor Reid, believes the firm could profit from picking up assets other mining companies, under financial strain of getting funds for ongoing projects, are forced to sell at very low price.

Noble’s CEO Yusuf Alireza said the deal is consistent with the trading firm's strategy to focus on supply chain management. Noble will be X2 Resources' preferred marketer and provider of supply chain management and logistics services, the partners said.