Mining Tycoon Davis Pursues £500m Copper Bid

The tycoon who built Xstrata into one of the world’s biggest commodities groups is pursuing a £500m deal to buy a group of copper assets from Anglo American (LSE: AAL.L - news) , the FTSE-100 miner.

Sky News has learnt that an offer from X2 Resources, a vehicle set up by Mick Davis, is among several that will be considered by Anglo’s board next week.

The auction of several copper mines in Chile - which collectively account for 12% of Anglo’s production of the metal - has been running for more than six months but sources said that it was nearing a point at which a preferred bidder would be identified.

X2 has raised more than $5.5bn from investors to purchase mining assets around the world, with TPG Capital, the private equity group, and Noble Group, the Singapore-listed commodities house.

Sovereign wealth funds and pension funds are also among X2’s backers.

Anglo, run by Mark Cutifani, is one of a number of global mining groups which are targeting disposals of assets which are regarded as non-core or which do not meet financial targets.

That glut of sale processes could play into the hands of buyers such as X2, with some commodity prices at or close to multi-year lows.

In a recent interview with the Financial Times, Mr Davis said copper, zinc and coal all presented attractive opportunities.

“Are we towards the bottom of the market? Yes. Whether we have reached the bottom of the market, I would not know,” he told the newspaper.

“When I look at where multiples have gone to on listed entities, and what is becoming available in potentially bilateral private transactions . . . I think this year seems to me a year when deals will be done,” he said.

Nicknamed ‘Mick the Miner’ by City investors, Mr Davis left Xstrata in 2013 following its merger with Glencore (Xetra: A1JAGV - news) , the Swiss-based commodities group.

Goldman Sachs (NYSE: GS-PB - news) , which assisted Mr Davis with X2’s fundraisings, and Morgan Stanley (Xetra: 885836 - news) are handling the auction of the Anglo copper assets.

Spokesmen for Anglo and X2 declined to comment.