Mick Davis (left), Trevor Reid (centre) and John Bond, chief executive officer, chairman and chief financial officer respectively of Xstrata, arrive for a shareholder’s meeting in Zug, Switzerland (file). Davis and Reid are said to be weighing plans to set up a privately-backed mining fund after Glencore International takes over their company.


Bloomberg/London

Xstrata chief executive officer Mick Davis and chief financial officer Trevor Reid are weighing plans to set up a privately-backed mining fund after Glencore International takes over their company, people familiar with the matter said.
The fund would probably buy the undeveloped resources that major mining companies are looking to sell, the people said, asking not to be identified before a public announcement. While the plans aren’t final, Davis and Reid would likely search for investors in emerging markets and the Middle East, they said.
The executives would join peers raking through the world’s unexploited mining assets. Bankers led by Lloyd Pengilly, formerly at JPMorgan Chase & Co, are also setting up a London-based fund with investors from countries including Poland and Qatar. That firm plans to invest mainly in African mining. An Xstrata official declined to comment on Davis and Reid’s plans.
The world’s largest mine operators are selling assets after a $1.1tn takeover binge in the past decade left producers including Anglo American and Rio Tinto Group writing down valuations. Rio, the second-largest mining company, is seeking a buyer for its Canadian iron-ore operations, a person close to the matter said last week. It has already raised about $12bn from divesting more than 20 projects.
Davis, 55, scheduled to leave Xstrata six months after the completion of the $35bn takeover by Glencore, built the producer from a disparate collection of mostly South African coal-mining assets into one of the largest mining companies.
He was slated to become CEO of the merged group until Ivan Glasenberg, head of Glencore, increased the bid for Xstrata on condition Davis give up the top job. That followed an investor revolt over bonus payments planned for managers including Davis.
Davis, who hand overs to Glasenberg after the six months, will get his contractual termination fee of £9.6mn ($14mn) without any retention bonus, according to Xstrata. In contrast, Glasenberg, 56, will get $173mn in dividend payments from Glencore’s 2012 earnings for his 16% stake.
Reid on December 4 decided against remaining as CFO at the merged company after the shareholders rejected paying a total of £144mn of bonuses to managers to spur them to stay.