Mick Davis has built Xstrata from a collection of second-rate coal reserves into a major-league mining company worth £32 billion in less than a decade and, as a result, he is the man everyone turns to when the subject of consolidation arises.

Mr Davis’s comment that BHP Billiton’s £62 billion bid for Rio Tinto will spark a wave of merger activity in the sector has, therefore, got a lot of investment bankers very excited. The prospect of Xstrata leading yet more multibillion-pound takeover bids will give everyone in the City plenty of work, even if the BHP-Rio mega-merger falls apart. The rumour last week was that Xstrata would bid up to £50 billion to take over Anglo-American and the shares of both companies soared.

But before the deal-makers get too excited, there are a few problems with the theory that Xstrata will lead another round of consolidation, not least because there is very little credit available for companies looking to do big deals. Rio Tinto has borrowed $40 billion (£19.7 billion) to buy Alcan and BHP has had to arrange credit notes worth $70 billion to cover its proposed acquisition of Rio. With global credit markets in a parlous state and $110 billion already tied up with the big two, other companies will struggle to raise financing.

Mr Davis has a reputation as a deal-maker and it is probably programmed into his DNA to try to take advantage of the BHP-Rio situation but his strategy this year has been about bolt-on acquisitions that strengthen individual divisions within Xstrata.

Xstrata has just bought New Hope, an Australian coalminer for A$960 million (£412 million); in October it bought Nickel Minor Jubilee for £1.4 billion and South Africa’s Eland Platinum for $1 billion in August. By promoting the idea of further consolidation, Mr Davis is placing Xstrata in the frame as a potential big fish predator.

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