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NEW MINING company X2 Resources, headed by former Xstrata CE Mick Davis and his team, made it clear last week that its doors are open for business.

But it is still low key. Though the company put out a press release, it was impossible to get more details on the record about its plans. Private investors willing to bet on the team's track record, big mining companies looking to exit noncore operations and smaller groups seeking a partner with mining expertise and capital-raising ability have probably taken notice, despite the downturn in the resources sector.

The downturn creates a favourable environment for making acquisitions. It also renders it unlikely that X2 Resources is going to list soon on any significant stock exchange. Though it looks impressive to have US$1bn in backing from a huge diversified private equity investor, TPG, and a global commodities trading house, Noble Group, this is still not enough for X2 Resources to make good second-tier acquisitions. Deals are likely to start flowing only once more money has been raised and the due diligence investigations are done. The company says it is in discussions with "a further select group of potential investors".

X2 Resources is going to be looking across all geographies and commodities for projects that are close to production, or that can reach potential with the injection of the necessary skills and capital. There may be some clues on where it is going to start looking in the team's track record and the partnerships it has formed.

Davis and former Xstrata CFO Trevor Reid are both of SA origin. Davis, who attended school in Port Elizabeth and studied at Rhodes University, is a former executive director of Eskom and CFO of Billiton Plc, and was instrumental in its merger with BHP of Australia. He was appointed CE of Xstrata in 2001 and built Xstrata up through acquisitions over 12 years into a diversified global company with interests in coal, copper, nickel, zinc and alloys.

Reid, who was born in Cape Town, joined Xstrata from Standard Bank and had previously worked for JCI and Gencor. Billiton was the London-listed base metals arm of Gencor. All the major resources groups have been refocusing their portfolios and it is rumoured that Billiton is looking to exit its aluminium assets in SA. Aluminium has stagnated for several years as a result of global oversupply and there are at least two years of inventory in the London Metals Exchange warehouses, Natixis Group says in its latest Metals Review. But as these stocks are absorbed, Natixis expects aluminium prices will average $2050/t in 2015 from $1900/t next year.

Another possibility within SA is that X2 Resources might consider buying platinum and ferrochrome assets that Glencore Xstrata may consider noncore as CE Ivan Glasenberg reshapes the post-merger portfolio. Though other big mining jurisdictions, like South America, Canada and Indonesia, also offer attractive opportunities, Davis's team understands the complexities of the SA operating environment better than most.

Noble Group, listed in Singapore, manages supply chains for agricultural, energy and minerals products. Noble describes its strategy on its website as "asset light". It develops and then sells assets to recycle capital.

Apart from its agricultural and oil processing and storage facilities around the world, it has stakes in various mining companies, including Resource Generation, which is listed on the JSE as well as the ASX. Noble will contribute market intelligence, proprietary deal flow, acquisition support and services like supply chain and risk management.

"The investment is consistent with our strategy of focusing primarily on our core competence as a supply chain manager," says Noble group CE Yusuf Alireza. TPG is a private equity company with about $55bn under management, according to its website. Its portfolio of 275 companies includes various energy and renewables ventures and some mining services, but no minerals.

Though private equity companies often take a three- to five-year view, TPG is understood to be viewing X2 Resources as a longer-term investment. Noble Group and "X2" - the name is presumably a play on "Xstrata Two" - appear to be following the same path as Glencore and Xstrata. Before they merged into a mining and marketing group, Glencore was a global metals and minerals marketing business with a substantial stake in, and synergies with, mining group Xstrata.

Commodities trading houses have in the past few years increasingly sought to buy stakes in producers to ensure security of supply, though they would prefer to keep their capital free for trading rather than locked up in assets. However, the environment for commodities has changed since Xstrata was launched, so X2 Resources' emphasis is likely to be different. Global demand trends have changed since the early to mid-2000s, when China and other Asian economies started a huge process of modernisation, which spurred demand for base metals. Now longer-term opportunities appear to lie in later-stage commodities used in consumption: potash, aluminium, ferrochrome, platinum and various forms of energy.