The company’s consolidated operating margin per ton expanded 10% in the third quarter of 2010 versus the second quarter, resulting from improved steam coal customer demand and continued, effective cost control at its operations.

“Arch's strong quarterly financial results were driven by better margins in each of our operating regions compared with a year ago,” Arch chairman and chief executive officer Steven F Leer said.

“The Powder River Basin - which continues to benefit from the acquisition of Jacobs Ranch on October 1, 2009, and its subsequent integration into Black Thunder - realised higher volume levels, lower cash costs and significant margin expansion.

“Pricing gains and solid cost control also boosted operating margins in the Western Bituminous region, despite the temporary outage at Dugout Canyon in the quarter just ended. Moreover, operating margins in Central Appalachia nearly tripled versus a year ago on increased metallurgical coal sales.”

Powder River Basin operating margins improved by nearly 40% quarter-on-quarter, reaching their highest level since mid-2006.

Revenues for the quarter were $US874.7 million while income from operations came in at $98.3 million.

Cash flow from operations totalled $457 million for the nine months ended September 30, 2010 - an increase of 85% year-on-year - while capital expenditures equalled $222 million, resulting in record free cash flow of $235 million for the first nine months of the year.

Arch has raised the midpoint of its 2010 adjusted earnings and its guidance for earnings before interest, tax, depreciation and amortisation, while maintaining its capital spending guidance.

“An improving earnings outlook coupled with our commitment to control capital spending levels should result in continued free cashflow generation,” Leer said.

Arch's overall lost-time safety performance and environmental compliance for the first three quarters are both on track to beat the previous company records set last year.

In the third quarter, seven operations attained a perfect zero - operating without a reportable safety incident or environmental compliance violation.

On October 16, the Black Thunder mine in the Powder River Basin surpassed 7 million employee-hours (more than 30 months) without a lost-time incident. In addition, the Coal-Mac complex in Central Appalachia was honoured on October 18 with a national award from the US Department of Interior for protecting the environment.

“We're proud of our employees for attaining these milestones and awards, which mark our progress towards the ultimate goal of no reportable safety incidents or environmental violations at any of our operations,” Arch president and chief operating officer John W Eaves said.