To replicate previous successes as Xstrata Plc’s ex-CEO, Mick Davis has raised $3.75 billion to transform his X2 Resources into a mid-tier miner. Top Asian materials trader Noble Group and private equity firm TPG Capital are helping X2 secure new assets alongside unnamed sovereign-wealth and pension-funds; all have committed $2.5 billion and $1.25 billion equally in conditional funding.

Davis earned his stripes amid a management team that transformed Xstrata plc from a $500 million coal producer into a $50 billion giant through 10 years of mergers, acquisitions and expansion. Last year, after the South African-born Davis left, Glencore International Plc completed its $29 billion full-share takeover of the company.

Davis has worked with Xstrata’s former Chief Financial Officer Trevor Reid, who also left Xstrata following the takeover, to found the London-headquartered X2. Glencore Chief Ivan Glasenberg became CEO of the combined Swiss-based entity worth more than $70 billion, remaining the industry’s biggest such merger.

Analysts said the new financing would allow X2 to acquire medium-sized copper mines or zinc assets along with thermal and coking coal. “The timing for this remains very opportune,” said Davis in a statement quoted by Bloomberg News, “and we will now focus increased attention on starting the investment process.”

The news comes at a time when challenges facing the mining sector are far from over, according to analysts. Moreover, mines have large up-front costs and can take years to return profits — often warding off private-equity investors. Mining companies, for their part, are slowing down amid falling demands; industry’s cyclical nature, meanwhile, means high-debt projects are more prone to going bust.

Resource Center Whitepapers, Videos, Case Studies

Let's stay in touch!

All of the latest mining news and our digital edition sent to your inbox once a week.

We'll never share your email address, and you can opt out at any time, we promise.