By St. Louis Business Journal

Arch Coal Inc. reported a profit of $66.2 million for the second quarter of 2010, compared with a loss of $15.1 million in the prior-year quarter, thanks to a jump in demand and prices, as well as an acquisition last fall.

Arch brought in $746.3 million in revenue for the quarter ended June 30, up 35 percent from $554.6 million a year earlier.

During the second quarter, Arch increased its equity interest in Knight Hawk Holdings LLC, a private Illinois Basin coal producer, from 33 percent to 42 percent. In exchange for the increased percentage ownership, Arch's resource management group contributed 68 million tons of company-owned reserves to Knight Hawk and recognized an after-tax gain of $26.4 million on the transaction.

"This investment in Knight Hawk coupled with the eventual development of Arch's own Illinois reserves will allow us to capitalize on the expected future growth of the region," Arch Chairman and Chief Executive Steven Leer said in Friday's earnings release.

Overall, coal markets have improved considerably since this time last year, but remain well below the levels of the bull market of 2008, Leer said. "Looking ahead, we expect to continue managing through any ongoing operational challenges and deliver even stronger results in the year's second half."

In October 2009, Arch bought Rio Tinto's Jacobs Ranch mine in Wyoming for $764 million.

St. Louis-based Arch Coal (NYSE:ACI) is the second-largest U.S. coal producer with revenue of $2.6 billion in 2009. The company has mining complexes in Wyoming, Utah, Colorado, West Virginia, Kentucky and Virginia.

Copyright 2010 American City Business Journals
Copyright 2010