A major mining merger or acquisition could be just around the corner as X2 Resources, former Xstrata boss Mick Davis’ new company, announced it had secured $5.6 billion to buy up assets and get back in the game.
Davis, a driving force in the deal-making that transformed the mining sector during a decade-long commodities boom, said in a statement the “blue-chip nature” of his company’s investors and the scale of their commitments to date were clear endorsements to both his private equity vehicle and the team’s expertise.
“We continue to carefully review a number of opportunities in the sector in detail. While value-creating opportunities are increasingly evident, the long-term nature of our strategy provides us with the flexibility to target those opportunities where we see the greatest potential for value creation,” he said.
X2 is expected to use its war chest to buy brownfield assets over the next two years, though its financial agreements are understood to have a five-year term.
Earlier this year market rumours pointed to the mining veteran considering Vale’s nickel business, which it is valued at between $5 billion and $7billion.
Last year the 56-year-old South African allegedly tried (and failed) to pick up BHP’s unloved assets. He is also said to have approached Anglo American in November, trying to grab some of the company’s assets including copper mines in Chile, Brazilian nickel mines and a few coal operations.
The team behind London-based X2, which also involves former Xstrata finance director Trevor Reid, has stated it believes the firm could profit from picking up assets other companies, under financial strain of getting funds for ongoing projects, are forced to sell at very low price.
Davis’ updated war chest includes $4bn in committed equity that can immediately be drawn down and $1.6bn in conditional capital.