Why X2 Resources CEO Mick Davis wants Rio's assets in Australia
As Business Review Australia’s sister site Mining Global recently wrote, the mining industry was shocked to discover former Xstrata CEO Mick Davis, who now operates mining investment group X2 Resources, is rumored to be in serious discussion to purchase some of Rio Tinto’s coal assets in Australia.
Although still in the very early stages, the multibillion-dollar deal has generated solid interest from both sides.
With more than $5.6 million at his disposal, Davis is still looking to acquire his first assets for X2. Earlier this month, the company was in the bidding war to purchase Barrick Gold’s Zaldivar copper mine in Chile. Unfortunately, the company was outbid in the first round of the sale process.
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In addition, reports surfaced last year that Davis wanted to purchase BHP Billiton’s thermal coal assets, while it was also rumored to be in the running for Vale’s nickel business earlier this year.
According to reports, Rio Tinto is open to possibly relinquishing its thermal coal assets in NSW in addition to its metallurgical coal assets in QLD. If Rio Tinto follows through and sells it thermal coal assets in New South Wales, it will be the biggest divesture by the company under CEO Sam Walsh.
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"I don't think Rio are wedded to these assets and if they get the right valuation for them I'm sure they would consider divesting," said Michelle Lopez, senior investment manager at Aberdeen Asset Management.
"Both possible acquirers [X2 and Glencore] are opportunistic, so the question becomes what's an appropriate valuation given these are long-life, scalable assets, but the coal price is unlikely to see much upside over the medium term."
The deal between would make sense for both sides, as X2 has coal and copper are on the top of its wish-list, however, there could me hurdles to climb as Glencore is also rumored to be interested in acquiring Rio’s coal assets.
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Rio’s Hunter Valley coal mine is right next door to Glencore’s coal business and the Swiss company tried to strike a deal for the coal mines with Rio Tinto a year ago as merging these mines with nearby coal assets owned by Glencore would lower the cost of production.
According to sources, Glencore is prepared to put $1.5-$2 billion on the table to acquire the assets, while X2 is likely willing to dish upwards of $3 billion.
Timeline: India takes unicorn leap with six in five days
We chart an historic week in India’s tech industry, where in just five days, between 5-9 April 2021, the country achieved six new unicorns, bringing India’s total to 10 in 2021 to date, an immense unicorn leap from just seven in 2020 and six in 2019.
April 5: Meesho
India’s first social commerce unicorn, Meesho raised US$300m from SoftBank, Facebook and Shunwei Capital, giving the Bangalore-based startup a US$2.1bn valuation, a threefold jump from its previous funding round in 2019. Founded in 2015 by two IIT-Delhi graduates, Meesho connects producers and resellers, helping small businesses sell through social media. It has 45m customers and has enabled 13m entrepreneurs to start their online businesses with no investment.
April 6: CRED
Founded just over two years ago, Bangalore-based credit card repayment app CRED raised US$215m from Falcon Edge Capital and Coatue, nearly trebling its valuation to US$2.2bn from its January US$80m round. Allowing customers to pay off their credit card debt while earning CRED coins which they cash in for rewards, CRED has grown rapidly during COVID-19, doubling its customer base to nearly 6 million in a year.
April 7: API Holdings / Groww
The first epharmacy startup to gain unicorn status, PharmEasy (API Holdings), which has digitised 60,000 brick and mortar pharmacies and 400 doctors across India, raised US$350m in a round led by Prosus Ventures. Founded by four former Flipkart employees as a way of making investing simple, investment platform Groww became India’s second-youngest fintech unicorn, raising US$83m in Series D funding led by Tiger Global, quadrupling its previous round in September.
April 8: ShareChat
New Delhi-grown social media startup ShareChat, founded in 2016 by Mohalla Tech raised US$502m from Lightspeed Ventures, Tiger Global, Twitter and Snap taking its raised total over six rounds to US$766m and pushing its valuation to US$2.1bn. The funding will be used to grow its user base and short video platform Moj, which launched in 2020 following TikTok’s ban in India. The regional language startup claims 280m users.
April 9: Gupshup
AI-led conversational message startup joined the unicorn club after raising US$100m from Tiger Global giving it a ten-fold valuation of US$1.4bn. The smart messaging platform, which has seen accelerated growth during the pandemic, was founded in Bangalore in 2005 by serial entrepreneur Beerud Sheth, whose online freelancing platform Elance is now listed. Gupshup’s API enables 100,000+ businesses to build messaging and conversation experiences across 30+ communication channels.