Merger was “a low in my career”, says Mick Davis of clash with Glencore’s Glasenberg

Sir Mick Davis

IT’S not often that Mick Davis, knighted by the United Kingdom’s queen in 2015, has been called an asshole; at least, not to his face one supposes. Enter Bernard Swanepoel, the former CEO of Harmony Gold who first bumped into Davis during the Eighties, early in their respective careers.

“When I first met you at Genmin (General Mining), I thought you were an asshole,” said Swanepoel, who was about to pose online audience questions during the Joburg Indaba conference he convenes and at which Davis was the star turn. “Then I got to know you, and I realised you were a clever asshole.”

That’s Swanepoel’s irreverent, purposefully jokey style that makes his conference events a rarity in that the convener is at least as entertaining as the delegates. If Davis was taken aback it didn’t show, maintaining to a tee his reputation as a cool customer.

A former colleague recalls a work-related dinner with Davis which was carried off in an awkward, near-complete silence; conversation difficult, and not encouraged by Davis. Anecdotes of this ilk have led to reputation that Davis is icily cold, a view assisted by his (highly successful) managerial style which was to decentralise management functions and delegate responsibility to the mining operations.

In a frank interview with Fiona Perrott-Humphrey, a banker for Rothschild & Co, the UK banker, Davis touched on what he nearly acknowledged was a character flaw. “One of the biggest challenges if you’ve had years of success is arrogance. The arrogance of success that not only are you convinced that everything you’re doing is right, but you’re convinced that people who observe you, think that you are right as well,” he said.

The most significant moment where this happened for Davis was in under-estimating the opposition investors would put up to a £240m payout and incentive scheme he’d proposed in 2012. The scheme was for employees of his company, Xstrata following its £60bn merger (or takeover, as some call it) with Glencore, the Swiss-headquartered commodity miner and trader.

As part of the package, Davis was set to benefit to the tune of £29m in three-year retention incentive once the merged company was created, which he would head. The incentive scheme never happened and, following four months of acrimony, and a falling out with Ivan Glasenberg, Glencore’s CEO, Davis left the company – a turn of events he described as a career low.

“The lowest point, without a doubt, was the ultimate merger or takeover by Glencore of Xstrata. Everything that I built up was essentially snatched away and that was a tough thing to actually deal with,” he said.

It’s arguable whether Davis has really recovered from those events. He re-emerged in the 2016 having raised half a billion dollars in a private equity fund mischievously named ‘X2 Resources’, hinting at his previous success at Xstrata. But X2 Resources closed in 2017 having failed to make a single investment, citing a lack of decent opportunities.

Davis describes his career as one of “unrequited ambition”. As a young auditor, Davis felt he should have been made a partner, but management of the firm where he worked considered him too young. After serving a period as Eskom’s financial director in the Nineties he was “passed over” for the CEO’s job, so he left. Davis was in his mid-thirties.

Then came seven “fantastic” years as CFO of Billiton, joining the equally ambitious Brian Gilbertson. The two took the company to a London listing in 1997 – among the first major South African companies to do so – followed by its merger with Australia’s BHP creating the largest mining firm at that time.

“There are four people who claim they brought Billiton to London: [Brian] Gilbertson, myself, Adrian Coates [a well known banker in London, then at HSBC] and Davis,” former JP Morgan banker Ian Hannam once said. “The answer is: it was Davis. He saw the opportunity and managed to persuade Gilbertson that it would create a platform to build a new company to rival Rio Tinto.”

The arrival of South Africans to the London Stock Exchange drew striking assessments from the locals. In a 2006 article by the Guardian, a fund manager is quoted remembering Billiton executives rolling up in the City: “I saw these guys with their nasty South African suits and dodgy haircuts and thought: ‘These guys won’t be world-beaters’. How wrong I was.”

The lowest point, without a doubt, was the ultimate merger or takeover by Glencore of Xstrata. Everything that I built up was essentially snatched away and that was a tough thing to actually deal with.

In fact, Davis was not only able – with Gilbertson and team – to turn Billiton into a leading mining firm, but he also became absorbed into British high society, initially as a donor to the Conservative Party, and later as its treasurer and CEO.

But the crowning glory was the bachelor knighthood conferred on him, at the behest of then Prime Minister, David Cameron, for services to Holocaust Commemoration and Education. Davis describes the moment as “a bolt out of the blue” as he hadn’t felt he’d done anything to deserve it.

“I really was quite overwhelmed by it as, I guess, everybody who gets these things … but nevertheless, it was a great experience to get and I was knighted at Windsor Castle, and the whole experience was very special.” He adds, though, that it doesn’t seem to change the way people relate to him (Bernard Swanepoel included!). “My wife said she was a dame before I was knighted.”


Davis is known in the mining industry as a doer of deals, normally blockbuster events. As CEO of Xstrata, a company that listed in London during 2002, he participated in more than 40 transactions.

One that didn’t pass muster, however, was the £41bn “merger of equals” with Anglo American, then managed by Cynthia Carroll. Carroll brought innovation to the stuffy Anglo set, especially an intolerance for mine fatalities which, in its way, foreshadowed the modern investment focus on environmental, sustainability and governance (ESG). But the company was suffering in other areas: it had overpaid for a large iron ore deposit in Brazil and had lost key technical skills.

Davis scented blood, but the merger was voted down by shareholders. Anglo’s board had rallied around Carroll, defeating the notion of a nil-premium bid which was later taken up by Glencore in its merger proposal to Xstrata. Notwithstanding this setback, and his controversial exit from Glencore-Xstrata, Davis’ reputation as an aggressive, growth-focused empire builder has tended to stick.

Today, he says the mining industry may be missing a beat. Whilst not necessarily advocating a return to major deal-making, Davis nonetheless believes that by not investing sufficiently in growth, mining firm valuations will eventually suffer.

Directors and management teams have not focused on this very simple proposition: every day they take something out of the ground, and unless you do something that replaces that, you end up withering.

According to consultant, PwC, there were seven ‘mega-deals’ worth over $1bn in 2019, but only three in 2020 to date, suggesting mining firms are more conservatively set out, focusing instead on dividends – and perhaps guilty of too much focus on meeting the short-term return goals of investment managers rather than honouring the long-term obligations of the orebodies they mine.

Davis warns this could be a mistake. “Mining majors have addressed their fundamental costs and all of them have done a fantastic job; making themselves more resilient as a result,” said Davis. By holding back investment programmes, mining management had satisfied the needs of the investment community.

“Therein lies their biggest challenge going forward. Directors and management teams have not focused on this very simple proposition: every day they take something out of the ground, and unless you do something that replaces that, you end up withering.”

Cost savings provided some value, but more value comes from investment. “The ability to create value depends upon the options you have available in your portfolio,” he said.

“I fear that this very focused approach on returning cash to shareholders in the form of dividends and capital returns has not, in fact, taken into account sufficiently the need to reinvest and so has not created optionality,” he added.


Little is known of the beneficiaries behind Niron Metals, registered in the UK in 2018 but which has Davis as a partner along with former De Beers’ marketing executive Varda Shine and Marcos Camhis, a Greek fund manager. This time around, Davis isn’t planning a new round of major deal-making, preferring instead to focus on smaller investments of an organic type.

But Niron Metals, however, has landed Davis in fresh controversy having teamed up with Beny Steinmetz of Beny Steinmetz Group (BSGR) Resources, a company that in 2018 lost a long-fought $2bn arbitration case with Brazilian miner, Vale. The lawsuit related to contested iron ore mineral rights in West Africa’s Guinea.

A ‘sting operation’ recently ‘proved’ a former Vale iron ore executive knew of the risks involved in Guinea’s iron ore prior to its investment with BSGR, which was the contestation in the lawsuit. Or so Steinmetz contends. Steinmetz is, therefore, hoping to have the matter reopened.

A similar arbitration between BSGR and government of Guinea was suddenly called off in 2019 with the two sides agreeing Beny Steinmetz develop the Zogota iron ore deposit in the country instead. This is Niron Metals’ challenge: it’s not an easy task. Time and again, the private sector has failed to get the freight and mine logistics right in the former French colony.

Davis, however, doesn’t necessarily see a return to large-scale corporate work; not as a swan-song or grand industry farewell moment, or anything like that.

In any event, it’s uncertain whether Davis’ quick-fire growth style is appreciated anymore. Investors representing 20% of Rio Tinto’s shareholders firmly rejected the Anglo-Australian group’s choice of Davis for chairman in 2017. According to reports at the time, shareholders shivered at the thought of retention and incentive awards that proved his undoing in the Glencore-Xstrata deal.

Davis acknowledged times have changed. The emergence of ESG as a key metric for mining investment is a game-changer, and reflects developments in wide society. “I find my children have a much greater social awareness, social conscience that, perhaps, I had when I was their age,” he said.

“They’re much more focused on creating public good in society as opposed to simply furthering the amount of money they can make, and things like that. And that’s a very noble thing.”

As for the mining sector at large, it hasn’t recovered from the capital excesses and subsequent collapse of the so-called China-inspired super-cycle.

I find my children have a much greater social awareness, social conscience that, perhaps, I had when I was their age.

From about 2000, China’s economy racked up double-digit GDP growth year after year, incentivising demand until the 2008 financial and economic crisis. That period of massive growth and collapse left a sour taste in the investment mouth, but it also catalysed negative views towards the mining sector and big capital among society at the same time as environmental consciousness was intensifying.

Owing to this failure of branding, the industry has been ignored and has been unable to attract young talent in the kind of numbers it wants. Davis, though, looks at the matter differently. “The vitality of resources to the growth of mankind is absolutely fundamental and that’s what we need to concentrate on and demonstrate,” he said.

“We do not need to be ashamed of how we managed our environmental impact as an industry. There are certain companies that should be ashamed, but we as an industry do not need to be ashamed of how we’re tackling this. I think that there’s a great story to be told and we need to go out and tell it.”

“Thank you Sir Mick,” chimed in the conference’s Swanepoel – which coming from him struck one as rare praise indeed!


  1. Great article, David. Thank you.

    Not a few Pearl’s of Wisdom here, to be sure. Not so sure, though, if we still have guys around who will appreciate and learn from them – still see a lot of nasty suits and dodgy haircuts – especially at the Joburg Indaba!!😂😂😂

  2. dividends or optionality in the ground? – what is the point of digging this stuff out of the ground unless you give your shareholders an adequate return for the risk. How many companies have gone bust playing the optionality – ‘jam tomorrow’ game. The optionality disappears as costs rise so best to pay dividends, further develop only the best orebodies – those that can support the sustainability of the business, the growth of the business and returns to shareholders. Companies without $ returns are speculation not investments. Davis makes his money on the deal!


Please enter your comment!
Please enter your name here