Arch Coal Inc. (ACI) said Friday that the Federal Trade Commission continues its review of the company's purchase of the Jacobs Ranch mine in Wyoming from Rio Tinto PLC (RTP), adding Arch was still looking to close the deal in the third quarter.

"We continue to be optimistic that the transaction is pro-competitive," said Arch Coal Chief Executive Steven Leer during a conference call on the company's second-quarter earnings.

The FTC in late May asked Arch Coal and Rio Tinto for additional information about the planned purchase - announced in March - of the Jacobs Ranch mine, from which 42.1 million tons of coal for sale to power generators was mined last year.

It isn't the first time St. Louis-based Arch Coal has faced hurdles from regulators in expanding its reach in the Powder River Basin. The company managed to complete a purchase of Triton Coal Co. in 2004 only after a federal appeals court decided not to issue an injunction on the deal after the FTC voted to block it, citing antitrust concerns.

The Jacobs Ranch transaction would include 381 million tons of low-cost coal reserves contiguous to Arch Coal's Black Thunder mine, plus a high-speed rail facility and other assets.

Arch is the third-largest producer of coal in the Powder River Basin by volume, following Peabody Energy Corp. (BTU) and Rio Tinto.

Earlier Friday, Arch Coal said it swung to a loss of $15.1 million, or 11 cents a share, in the second quarter amid a sharp drop in demand for coal. The company also narrowed its 2009 earnings target and cut its forecast for full-year coal sales.

However, "we believe we have reached the bottom of the current coal market cycle," Leer said during the call.

Shares of Arch Coal were recently up 22 cents, or 1.3%, at $17.09. Arch Coal's share price is still down 72% from the 52-week high hit at the end of July 2008. The company, like its peers, has been hit by a drops in power and steel demand amid the recession.

-By Mark Long, Dow Jones Newswires; (212) 416-2145; mark.long@dowjones.com