Full-year earnings were $389.4 million, up 21.3% over 2010. Net income totaled $91.7 million in the final three months of last year, beating earnings of $87.3 million in the year-ago quarter. In 2011, Alliance, which operates in three geographic regions—Central Appalachia, Northern Appalachia and the Illinois Basin—produced 30.8 million tons and sold 31.9 million tons. Craft said he expects those numbers to grow this year to 34-35 million tons and 34.75-35.85 million tons, respectively, in 2012.

Alliance sold 8.2 million tons of coal in the fourth quarter, a gain of 5.4% over the year-ago total. The increase was attributed in part to the resumption of full production at the Pattiki underground mine near Carmi in White County, Ill., and higher coal sales at the Gibson North deep mine near Princeton in Gibson County, Ind. Pattiki’s output in 2010 was hampered by the failure of a conveyor-belt system that took several months to replace.

In Northern Appalachia, a longwall move at the Mountain View underground mine in Tucker County, W.Va., during the fourth quarter resulted in lower coal sales volumes compared to the corresponding 2010 quarter.

Alliance’s new Tunnel Ridge longwall mine should drive this year’s increase, Craft said. With extensive reserves in Washington County, Pa., and Ohio County, W.Va., Tunnel Ridge is in the process of ramping up production of high-sulfur steam coal. When in peak production, it should turn out about 6 million tons annually.

Construction continues, meanwhile, on Alliance’s new Gibson South underground mine near also in Gibson County. Operated by a subsidiary, Gibson County Coal, Gibson South is targeted to produce about 3.1 million tons of high-sulfur steam coal a year, probably starting in 2014. The mine will be a continuous miner operation.

Craft said the Alliance team “again delivered exceptional results in 2011 as ALRP set new records for all major operating and financial measures…looking ahead, we remain encouraged that our strategy of expanding ALRP’s presence as a low-cost operator in the growing Illinois Basin and Northern Appalachia coal markets will create opportunities for continued growth in the future.”

But all is not smooth sailing for the coal industry these days. Far from it. Referring to low natural gas prices, weaker export demand and ongoing regulatory obstacles in the United States, Craft said they create “challenges for domestic producers.”

But he also sees a silver lining amid the gloom. Coal producers will respond to the onrushing headwinds by scaling back production, which will have the effect of raising coal prices in the latter half of this year, he predicted.