The company’s operating income fell 61% from the previous quarter to $397 million.

“The drop in operating income resulted from higher operating costs, primarily due to a rise in raw materials cost, while steel selling prices were generally lower for the quarter,” Arcelor said.

Higher metallurgical coal prices in the wake of Queensland’s horrid wet season are likely to have a further impact on Arcelor’s current quarter.

Impairment losses for the December quarter reached $547 million with Arcelor attributing a $113 million loss to its coal mines in Russia.

The company sold its Anzherkoye mine in the country last July, which resulted in an impairment loss of $199 million in the September quarter.

For the 2010 calendar year, Arcelor’s net income came to $2.9 billion.

The company completed the underground expansion to lift production capacity at its American Princeton coal mine by 700,000 tonnes per annum last month.

Arcelor produced 7 million tonnes of coal in 2010, including 1.8Mt in the December quarter.

The steelmaker is a major shareholder of Macarthur Coal and Coal of Africa.

Arcelor is pursuing further joint venture opportunities in coal projects around the world, according to investor presentations made back in September.