JOHANNESBURG (miningweekly.com) – Shades of the old Xstrata surfaced on Monday with the emergence of the new X2 Resources, backed by an initial $1-billion investment, under former Xstrata stalwart Mick Davis and his long-standing support executive Trevor Reid.
X2 Partners, Noble Group Limited and TPG Capital announced their agreement to invest in the newly established private X2 Resources mining venture, into which Noble and TPG will each put $500-million.
Michael Lawrence (Mick) Davis is well-known in these parts, not only as the former CEO of Xstrata since 2001, but also as the CFO who helped to create the Billiton in BHP Billiton, as the former executive director of South Africa’s State-owned power utility Eskom, and as the boy from Theodor Herzl High School in Port Elizabeth, who graduated from Rhodes University in the Eastern Cape, and who lectured at the University of the Witwatersrand in Johannesburg.
X2 will seek opportunities in the mining and metals sector.
At 55, Davis still has some way to go, and will probably want to do even more with X2 than he did with Xstrata, which under his watch went from a market capitalisation of $500-million on the London Stock Exchange to more than $50-billion in eight years.
Davis spoke, in a media release, of the “enthusiasm for this enterprise to create significant value in the mining and metals industry at this opportune time” and expressed confidence that the new diversified resources company was “distinctively able to capture this value”.
Xstrata, which became a 62 000-employee company with significant South African investments, is now a key part of Glencore Xstrata under Ivan Glasenberg, whom Davis acknowledged as recently as 2010 was the businessperson who impressed him the most.
X2’s investment proposition is to create a new mid-tier diversified mining and metals group by leveraging the multi-decade track record of the X2 team in acquiring assets and businesses “at an opportune time in the cycle”, and applying their proven approach to integration and value enhancement to the resulting portfolio of operations.
Headed by CEO Yusuf Alireza, Noble brings market intelligence, deal flow, acquisition support and post-acquisition services as X2’s preferred marketer and provider of supply chain management and logistics services.
Private investor TPG, which has Jim Coulter as founding partner, has $55.3-billion of assets under management around the world.
X2 continues to be in discussion with “a further select group of potential investors”, who are also seeking to invest in the new company.
Goldman Sachs International acted as X2’s financial adviser.
Davis converts clear vision into action with a lot of self-belief, establishing clear lines of accountability and then giving people space to perform.
Growing Xstrata from a small, indebted Swiss company into one of the world’s most significant major diversified mining companies was a major achievement to which can be added the central role he played in the merger of BHP and Billiton into the world’s biggest mining company.
Prior to that, he listed Billiton on the London Stock Exchange with Reid’s help, and re-established London as a centre of mining finance.
One of his expressed hopes is for South Africa to become a centre of mining finance for Africa.