By Doreen Walton BBC World Business Report

A small Swiss-based firm is to spend $2.5bn on coal mining operations in South Africa and Australia.

The company, Xstrata, also wants to follow in the footsteps of some of its larger rivals by listing its shares in London.

Key to Xstrata's ambitions is its chief executive Mick Davis who was, until last June, the finance director of mining giant Billiton.

Mr Davis has said Xstrata's new structure will be used to make even more acquisitions and he aims to form a company which will eventually be large enough to handle any mining or metals projects that come its way.

The coal assets Xstrata plans to buy in South Africa and Australia belong to its largest shareholder, Glencore.

Ambitious plans

Mr Davis engineered Billiton's expansion and merger with BHP of Australia.

BHP Billiton is now one of the world's three leading mining companies.

When Mister Davis joined Xstrata - a company less than one-tenth the size of Billiton - people were understandably surprised.

But Xstrata's purchase plans are a good indication of Mr Davis' ambitions for the company.

Long way to go

Buying those coal operations will diversify Xstrata's activities adding to its core businesses of zinc, chrome and vanadium, a metal which is used in rust-resistant high-speed tools.

Those metals are all very sensitive to volatility in the steel market. Xstrata's investment in coal will give it something else to fall back on when steel prices dip.

A listing on the London Stock Exchange is also planned.

Xstrata plans to raise $923m (�650m) by selling new shares, creating a company with a market value of some $2bn (�1.4bn).

That is still only a fraction of the size of BHP and other rivals such as Rio Tinto and Anglo American, and some analysts point out that Xstrata has a long way to go before it joins the big league.