Mick Davis says commodities prices close to bottoming out – by James Wilson and Neil Hume (Financial Times – April 21, 2015)


Lausanne – Mick Davis, one of the mining sector’s most prolific dealmakers, on Tuesday declared that commodities prices were close to bottoming out, and signalled that this may be the year his X2 private equity vehicle starts buying assets.

The sector has been eager to see how the former Xstrata chief executive would invest after he raised up to $5.6bn to fund his ambition of building a mid-tier diversified miner.

At the FT Commodities Global Summit in Lausanne, Mr Davis said there were now “squeaks of distress” from some companies, with plunging commodities prices hitting corporate valuations. “Are we towards the bottom of the market? Yes. Whether we have reached the bottom of the market, I would not know,” he added.

Mr Davis said that copper and zinc were attractive assets to invest in, adding that some markets which “people are completely out of love with”, such as coal, also offered buying opportunities.
“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.

During the previous decade, Mr Davis turned Xstrata into one of the world’s largest mining companies during a boom period for commodities triggered by Chinese growth.

After leaving Xstrata following its takeover by Glencore in 2013, he set up X2 with funds from backers including Noble Group, the commodities trading house, and TPG, the private equity firm.

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