Glencore exercises Prodeco coal option

[] — GLOBAL diversified miner Xstrata, which has alloys, coal and platinum operations in South Africa, said it has received formal notification from Glencore International informing its of Glencore’s exercise of its option to acquire the Prodeco coal operations.

Under the option agreement, Glencore will pay Xstrata $2.25 bn in cash upon completion of the sale to Glencore pursuant to the exercise of the option, plus any profits accrued but not distributed to Xstrata during the period January 2009 to the completion date and the net balance of any cash invested by Xstrata.

“The acquisition of the Prodeco operations last year facilitated an orderly rights issue process during very challenging market conditions,” said Xstrata chief executive Mick Davis.

“Glencore‚Äôs decision to exercise its option provides Xstrata’s shareholders with a robust cash return on the initial purchase price and provides additional financial flexibility as Xstrata’s capital expenditure programme ramps up to deliver 50% volume growth by 2014, including a 50% increase in coal and copper production and a doubling of current nickel volumes,” Davis said.