Former Xstrata chief executive officer Mick Davis is returning to the mining business with a new venture called X2 Partners.
Davis, along with former Xstrata financial officer Trevor Reid, have secured a combined $1 billion from trading house Noble Group Ltd and private equity firm TPG to create the mid-tier diversified mining and metals group, the Wall Street Journal reported.
Davis and Reid have been away from mining since May when Glencore acquired Xstrata for $44.6 billion. The return to the sector marks a coup for the former executives, who were able to secure a sizeable investment at a time when the commodities cycle has ebbed and investors have been reluctant to allocate funds to new mining ventures.
The sale of Xstrata to Glencore was the mining industry's largest transaction and resulted in the creation of Glencore Xstrata PLC the world's fourth-largest diversified miner by market capitalization.
Noble Group and TPG have signed non-binding agreements, subject to documentation, in which each will invest $500 million into X2 Resources, a company that aims to become new mid-tier diversified mining and metals group by leveraging the extensive record of the X2 team in mining and metals, the Wall Street Journal reported.
The partners didn't disclose what kind of metals they would like to invest in nor the regions they are looking at but they said they are in discussions with other potential investors to raise more funds for X2 Resources.
The X2 team comprises executives responsible for creating Xstrata more than a decade ago and transforming the Anglo Swiss miner from a ferrochrome and zinc business with a market capitalization of $500 million into a globally diversified mining company with a market capitalization of about $50 billion as of last December.
“We are pleased that Noble and TPG share our enthusiasm for this enterprise to create significant value in the mining and metals industry at this opportune time,” said Davis. “The combination of the X2 Partners team's multi-decade industry experience with Noble’s and TPG’s strongly complementary capabilities will ensure X2 Resources is distinctively able