Matthew Campbell, Firat Kayakiran and Jesse Riseborough
XSTRATA chief executive Mick Davis and chief financial officer Trevor Reid were weighing plans to set up a privately backed mining fund after Glencore International took over their company, people familiar with the matter said on Friday.
The fund would probably buy the undeveloped resources that major mining companies were looking to sell, the people said, asking not to be identified.
While the plans were not final, Davis and Reid would probably 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, are also setting up a fund in London with investors from countries including Poland and Qatar. That firm plans to invest mainly in African mining.
An Xstrata official declined to comment on the matter.
The world’s largest mine operators are selling assets after a $1.1 trillion (R9.9 trillion) takeover binge in the past decade left producers including Anglo American and Rio Tinto writing down valuations.
Rio Tinto was seeking a buyer for its Canadian iron ore operations, a person close to the matter said last week. The company has already raised about $12bn from divesting more than 20 projects.
Davis, scheduled to leave Xstrata six months after the completion of the $35bn Glencore takeover, 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 chief executive of the merged group until Glencore head Ivan Glasenberg 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 would hand over to Glasenberg after six months, would get a contractual termination fee of £9.6 million (R130m) without retention bonuses, Xstrata said.
In contrast, Glasenberg will get $173m in dividend payments from Glencore’s 2012 earnings for his 16 percent stake in the company.
Reid decided last December against remaining as chief financial officer at the merged company after the shareholders rejected paying £144m of bonuses to managers to spur them to stay. – Bloomberg