Its margin increased to $US15.30 per ton for the quarter, primarily due to higher price realisation from growing metallurgical shipments, ICG president and chief executive Ben Hatfield said.
“Robust metallurgical coal deliveries and solid thermal shipments led to our strong third-quarter performance,” he said.
“Despite cost pressures resulting from proactive regulatory compliance-improvement efforts and heightened enforcement, we still improved our margins compared to prior periods.
“Investment in safety and compliance improvement initiatives is not only the right thing to do, it is essential for the financial health of our business.”
Net income was $24.9 million for the quarter compared to $18.7 million for the third quarter of 2009.
Coal sales revenues also increased to $293.6 million for the quarter compared to $246.8 million for the same period last year.
“Pricing in the metallurgical market was firm during the quarter, and we are pleased with recent progress on our contracting efforts for 2011,” Hatfield said.
“Since our last earnings release, we have committed 1.3 million tons of metallurgical coal at an average price of $150 per ton.
“In the thermal market, prices and spot demand rebounded sharply during July and August. Despite a pull-back in September, we were successful in committing 1.5 million tons of thermal coal at an average price of $70 per ton since our last report.
“We remain encouraged that utility inventory levels have dropped substantially, but our outlook is somewhat tempered due to sizeable natural gas inventories and low natural gas prices.”
ICG sold 4.4Mt of coal during the third quarter of 2010 compared to 4.1Mt in the third quarter of 2009.
Production totalled 4Mt for the quarter versus 3.9Mt for the same period last year. Metallurgical shipments of 621,000t represented a 127% increase over the third quarter of the prior year.
As of September 30, 2010, ICG controlled approximately 1.1Bt of coal reserves, located primarily in Illinois, Kentucky, West Virginia, Maryland and Virginia.
The company also controlled approximately 433Mt of non-reserve coal deposits, which may be classified as reserves in the future as additional drilling and geotechnical work is completed.
Site development at ICG Tygart Valley's #1 mine complex continued on pace in the third quarter and is expected to be completed by year-end.
Construction of the slope is expected to begin in early November and work on the shafts is expected to begin in December 2010.
Initial production started at Vindex Energy's Bismarck deep mine in September 2010.
The company anticipates the mine will contribute approximately 180,000t of low-volatile metallurgical coal sales in 2011, and achieve the targeted run-rate of 250,000tpa by the fourth quarter of 2011.
Current market conditions remain mixed, the company said.
“While the metallurgical segment is stable with prices steadily improving, near-term thermal demand is relatively soft due to utility coal burn displacement by cheap natural gas and reduced weather-related demand,” it said.
“The company anticipates that thermal coal prices will rise in 2011 due to production constraints and an improving economic outlook, and that rising global steel demand will continue to strengthen pricing on premium metallurgical coal.”