Mick Davis and Alberto Calderon have turned the tables on their former employers.
As global mining heavyweights rush to offload assets in a bid to reduce debt, Davis and Calderon independently are in the process of positioning themselves to take advantage.
Davis, the former chief executive of Xstrata, and his long time chief financial officer Trevor Reid are in the final stages of raising seed capital through Goldman Sachs for a mining investment fund. Meanwhile, Calderon, who missed out on the top job at BHP, is engaged in the same process, reportedly through a private equity fund.
BHP, Rio Tinto and the newly merged Glencore Xstrata are all engaged in large scale asset disposals, pitting themselves against one another as sellers.
That follows a decade of each of them outbidding one another and occasionally bidding for each other in a desperate grab for scale and expansion as the resources boom gathered steam.
It wasn’t just asset prices that escalated during those years. The price of labour and mining services contractors skyrocketed as each company attempted to trump the other on mine expansions and development.
Now they are doing the opposite. BHP and Rio Tinto alone have earmarked close to $30 billion in asset sales on everything from coal to diamonds as they attempt to lower debt and return a greater portion of earnings to shareholders.
For companies that have staked their reputations on building and acquiring long life tier one assets, the current round of disposals appears to be every bit as rushed and potentially short sighted as the expansions at the height of the resources investment boom.
Rio Tinto’s record on acquisitions was frightening. Its $US38 billion purchase of Alcan was a disaster that almost sank the company. It backed that up with the $US3.5 billion takeover of Mozambique coal hopeful Riversdale, that cost Rio shareholders dearly and chief Tom Albanese his job.
Speculation is mounting that new chief Sam Walsh is considering a complete disposal of the aluminium operation along with a host of copper, gold and iron ore assets in Australia and North America. The Mozambique coal operation is believed to be on the market for as little as $200 million.
After jettisoning $5 billion worth of assets in the past year, BHP has earmarked the disposal of some Australian metallurgical coal operations, recently sold a North American copper operation for $US650 million and last week banked $1.5 billion for offloading a 15% stake in the Jimblebar iron ore mine.
Glencore, meanwhile, has its Peruvian copper operations on the market for a reputed $US5 billion.
Was there ever a better time to be a buyer?