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Mick Davis outbid

Mick Davis bids for Anglo's Chile copper mines


All eyes have been on Mick Davis and his $5.6 billion X2 fund to set the ball rolling for private equity in mining. But the ex-Billiton CFO has so far failed to pull the trigger despite the likes of Anglo-American, BHP Billiton and Vale putting assets up for sale.

Now Reuters reports that X2 is among the firms bidding for two Anglo American copper mines in Chile.

According to unnamed sources “Mick seems keen on those assets” while Glencore and boutique UK investment firm Audley Capital are also in the running. In the past Chile’s state-owned copper giant Codelco was also mentioned as a possible bidder.

Bids for the Mantos Blancos and Mantoverde copper mines closed last week. The $1 billion number for both has been touted for a long time, but “two mining sources familiar with the mines gave more conservative valuations of around $500 million or less”:

“An industry source said although Glencore was still in the process it was unlikely to make a high enough bid to win the assets.”

“They are both mines towards the end of their life although with some investment Mantoverde’s life can be extended,” a second industry source said. “I would think a smaller firm like Audley is more likely to get them. Certainly the John MacKenzie [former Anglo copper head] connection is strong.”

Meanwhile a separate report claims that X2 didn’t come close to the winning bid for a stake in Barrick Gold’s Zaldivar copper mine in Chile once dubbed as the “Andean ATM”.

“There were seven bids higher than that of X2,” a London-based banking source with knowledge of the matter told Mining Weekly. “They couldn’t make the numbers work.”

Davis’ cautious approach with X2 is somewhat uncharacteristic. Davis built Xstrata over less than a decade through a series of billion dollar transactions into a company with 70,000 employees in 20 countries. Xstrata’s market value peaked in 2008 at $85 billion.

But even before then Davis was a formidable dealmaker who with fellow South African Brian Gilbertson created Billiton. Davis left for Xstrata after Billiton was sold to BHP in 2001 (Gilberston moved into emeralds of all things). That whole saga has of course now come full circle with the spin-off of South32.