Former Xstrata boss Mick Davis is holding talks with BHP Billiton for the acquisition of its thermal coal business through mining investment company X2 Resources.

BHP has eight thermal coal mines across South Africa, Australia, the US and South America.

Davis, who was the head of mining giant Xstrata until its merger with Glencore, has raised $3.75bn of funds, which he plans to invest in different projects with the aim of making X2 Resources a mining conglomerate.

X2 Resources, which is co-headed by former Xstrata CFO Trevor Reid, has investors that include TPG Capital, Noble Group and three anonymous sovereign wealth and pension fund investors.

Additionally, Davis has appointed JPMorgan to raise a loan of up to $8bn to fund the ambitious acquisition, according to The Sunday Times.

As the finance director of Billiton before its merger with BHP, Mick Davis is keen to take over the coal operations that formed the core of the old company. BHP had previously said it wants to spin off these businesses.

According to market reports, the acquisition of aluminium, manganese and nickel assets, South African energy coal mines and the Cannington silver and lead mine in Queensland would be worth around $14bn.

The mining industry is seeing majors firms such as Rio Tinto divesting their non-core or under-performing assets to raise cash for shareholders.