Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2010 Commission file number: 333-107569-03 Arch Western Resources, LLC (Exact name of registrant as specified in its charter) Delaware 43-1811130 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) One CityPlace Drive, Ste. 300, St. Louis, Missouri 63141 (Address of principal executive offices) (Zip code) Registrant’s telephone number, including area code: (314) 994-2700 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ☑ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☑ No o Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No ☑ (Note: As a voluntary filer not subject to the filing requirements of Section 13 or 15(d) of the Exchange Act, the registrant has filed all reports pursuant to Section 13 or 15(d) of the Exchange Act during the preceding 12 months as if it were subject to such filing requirements.) Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes o No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer ☑ Smaller Reporting Company o (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ☑ At March 28, 2011, the registrant’s common equity consisted solely of undenominated membership interests, 99.5% of which were held by Arch Western Acquisition Corporation and 0.5% of which were held by a subsidiary of BP p.l.c. TABLE OF CONTENTS Page PART I ITEM 1. BUSINESS 3 ITEM 1A. RISK FACTORS 22 ITEM 1B. UNRESOLVED STAFF COMMENTS 29 ITEM 2. PROPERTIES 29 ITEM 3. LEGAL PROCEEDINGS 32 ITEM 4. RESERVED 32 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 34 ITEM 6. SELECTED FINANCIAL DATA 35 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 35 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 45 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 45 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 45 ITEM 9A. CONTROLS AND PROCEDURES 45 ITEM 9B. OTHER INFORMATION 46 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 46 ITEM 11. EXECUTIVE COMPENSATION 47 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 47 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 48 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 48 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 48 EX-21.1 EX-31.1 EX-31.2 EX-32.1 EX-32.2 1 Table of Contents If you are not familiar with any of the mining terms used in this report, we have provided explanations of many of them under the caption “Glossary of Selected Mining Terms” on page 21 of this report. Unless the context otherwise requires, all references in this report to “Arch Western,” “we,” “us,” or “our” are to Arch Western Resources, LLC and its subsidiaries. CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, such as our expected future business and financial performance, and are intended to come within the safe harbor protections provided by those sections. The words “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “predicts,” “projects,” “seeks,” “should,” “will” or other comparable words and phrases identify forward-looking statements, which speak only as of the date of this report. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Actual results may vary significantly from those anticipated due to many factors, including: • market demand for coal and electricity; • geologic conditions, weather and other inherent risks of coal mining that are beyond our control; • competition within our industry and with producers of competing energy sources; • excess production and production capacity; • our ability to acquire or develop coal reserves in an economically feasible manner; • inaccuracies in our estimates of our coal reserves; • availability and price of mining and other industrial supplies; • availability of skilled employees and other workforce factors; • our ability to collect payments from our customers; • defects in title or the loss of a leasehold interest; • railroad, barge, truck and other transportation performance and costs; • our ability to successfully integrate the operations that we acquire; • our ability to secure new coal supply arrangements or to renew existing coal supply arrangements; • our relationships with, and other conditions affecting, our customers; • the deferral of contracted shipments of coal by our customers; • our ability to service our outstanding indebtedness; • our ability to comply with the restrictions imposed by our financing arrangements; • the availability and cost of surety bonds; • terrorist attacks, military action or war; • our ability to obtain and renew various permits, including permits authorizing the disposition of certain mining waste; • existing and future legislation and regulations affecting both our coal mining operations and our customers’ coal usage, governmental policies and taxes, including those aimed at reducing emissions of elements such as mercury, sulfur dioxides, nitrogen oxides, particulate matter or greenhouse gases; • the accuracy of our estimates of reclamation and other mine closure obligations; • the existence of hazardous substances or other environmental contamination on property owned or used by us; and • the other factors affecting our business described below under the caption “Risk Factors.” All forward-looking statements in this report, as well as all other written and oral forward-looking statements attributable to us or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements contained in this section and elsewhere in this report. See Items 1A “Risk Factors,” 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and 7A “Quantitative and Qualitative Disclosures About Market Risk” for additional information about 2 Table of Contents factors that may affect our businesses and operating results. These factors are not necessarily all of the important factors that could affect us. These risks and uncertainties, as well as other risks of which we are not aware or which we currently do not believe to be material, may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. PART I ITEM 1. BUSINESS. Introduction We are a subsidiary of Arch Coal, Inc., one of the world’s largest coal producers. For the year ended December 31, 2010, we sold approximately 144 million tons of coal, representing roughly 13% of the U.S. coal supply. We sell substantially all of our coal to power plants and industrial facilities. At December 31, 2010, we operated seven active mines located in two of the three major low-sulfur coal-producing regions of the United States. Significant federal and state environmental regulations affect the demand for coal. Existing environmental regulations limiting the emission of certain impurities caused by coal combustion and new regulations have had and are likely to continue to have a considerable impact on our business. For example, certain federal and state environmental regulations currently limit the amount of sulfur dioxide that may be emitted as a result of combustion. As a result, we focus on mining, processing and marketing coal with low sulfur content. Despite these and other regulations, we expect worldwide coal demand to increase over time, particularly in developing countries such as China and India, where electricity demand is increasing much faster than in developed parts of the world. Although the global economic recession has had a significant impact on certain regions of the world, we expect worldwide energy demand to increase over the next 20 years.