It was a mixed first half result from Rio Tinto's NSW coal mining subsidiary, Coal & Allied, with sales and earnings down, but the promise of better to come.

But those shareholders who have stayed with the business are going to be smiling, an interim payout of $4.50 a share, almost three times the $1.60 a share paid in the first half of 2009.

The company told the ASX yesterday afternoon that first half revenue was down 26% at $929 million, from the $1.250 billion earned in the same period of 2009.

"Profit after tax was $498 million, up 54% cent (June 2009: $324 million), which included asset sales profits," the company said in yesterday's statement to the Exchange.

"Profit after tax excluding divestments for H1 2010 was $161 million, down 50 per cent (June 2009: $324 million).

"Interim ordinary dividend of 450 cents per share fully franked (June 2009: 160 cents)."

Commenting on the company's performance, Coal & Allied's Managing Director, Bill Champion, said: "Coal & Allied's production in the first half of 2010 was unfavourably affected by wet weather and rising overburden strip ratios across our mines.

"However our strategy to focus on higher priced semi soft coking coal led to strong semi soft coking coal production volumes.

"Coal & Allied's revenue was down 25.7 per cent compared with the first half of 2009.

"Coal & Allied's profit after tax of $498 million benefitted from the gain on the divestment of two undeveloped Gunnedah Basin coal projects.

"Excluding this divestment gain, profit after tax in the first six months of the year was $161 million.

"The result is lower than the first half of 2009 due to adverse exchange rate movements, lower coal prices and increased production costs, largely due to rising overburden strip ratios across the operations."

Mr Champion said in the statement that Coal & Allied's share of production in the first half of 2010 increased by 2% compared with the same time last year.

"The overall increase in saleable production was assisted by the progressive commissioning of new heavy mobile equipment at Mount Thorley Warkworth, and through mining a more productive coal seam at Bengalla," Mr Champion said.

"Semi-soft coking coal sales production increased by 87 per cent, contributing 26 per cent of Coal & Allied sales volumes, compared with 13 per cent in the first half of 2009. While the semi-soft coking coal production process reduced overall yield, this was more than offset by the increased margins on sales.

"We continue to expect a strong second half in 2010 and are targeting full year production of 27 million tonnes (100 per cent), with a higher proportion of thermal coal in the mix relative to the first half.

"Second half semi-soft coking coal production tonnage is likely to be slightly lower than that achieved in the first half.

"Coal & Allied is in the process of accelerating waste removal to lift its mine production to match plant capacity. We are progressively commissioning new heavy mobile equipment and increasing the number of operators and maintainers for our additional waste stripping requirements.

"These actions have resulted in additional cost pressures for the business.

"Railing delays and higher than anticipated ship queues in the first half of 2010 contributed to a build up of inventories, though this additional stock will be depleted early in the second half of the year."

Coal and Allied shares finished up 12c at $99.60, recovering after the profit statement was released. The shares had earlier hit a low of $98.11.

And Wesfarmers Ltd has reported a fall in coal production at one of its mines, but output rose at its other two coal mines.

Wesfarmers told the ASX yesterday that production recovered from its most important mine, the Curragh operation in Central Queensland.

June quarter output rose 6.4% from the March quarter as operations returned to normal after the very wet March quarter.

"Coal production for the quarter was 2,298,000 tonnes (comprising 1,612,000 tonnes of metallurgical coal and 686,000 tonnes of steaming coal), 6.4 per cent higher than the previous quarter," Wesfarmers said in the report.

"Metallurgical coal production increased by 4.7 per cent compared to the March 2010 quarter, which had been affected by wet weather and force majeure events.

"Steaming coal production was 10.6 per cent higher than the previous quarter due mainly to higher contracted demand."

But production of both coking and steaming coal was lower than in the June quarter of 2009.

"As previously announced, the expansion of Curragh Mine up to 8.5 million tonnes per annum of export metallurgical coal was approved by the Wesfarmers Limited Board on 10 November 2009. Expansion works are underway, with the project scheduled for completion late calendar year 2011," the company said in the statement.

The rise in output is timely for Wesfarmers as it coincides with the rise in prices from April 1 for steaming and coking coal.

Wesfarmers should report a substantial rise in sales revenue and earnings for the quarter from Curragh, possibly in the order of 40-50% or more from the same period of 2009 when price cuts started.

Wesfarmers said production at its Bengalla mine in the Hunter Valley of NSW for the June quarter was up 20.4% on the previous quarter due to the company operating in a "more productive part of the mine sequence".

Wesfarmers' share of coal production for the quarter was 591,000 tonnes, the company reported. Wesfarmers share was up on the same quarter of 2009.

And output from its Premier mine near Collie in Western Australia for the June quarter fell 7.6% on the previous quarter due to lower demand from WA state electricity generator Verve Energy.

Production was also down 11.9% on the June quarter of 2009.

During the June quarter, Wesfarmers completed preparations to become the sole supplier of coal to Verve from July 1 after rival coal miner Griffin Coal collapsed and was placed in administration in January.

Wesfarmers shares rose 28c to $30.36 yesterday.

Centennial Coal, which is about to be taken over by Banpu of Thailand, yesterday filed what was probably its final production report.

The company said that "July 2010 production is off to a good start, with the group meeting production expectations".

That was after its share of run of mine coal production totalled 3.6 million tonnes for the quarter and 14.2 million tonnes on a full year basis.

Adjusting for discontinued operations (the Newstan and Berrima mines) full year production was up 7%.

Centennial's equity share of coal sales totalled 3.8 million tonnes for the quarter and 13.8 million tonnes on a full year basis, with export sales up 6% on 2009.

ROM coal production under Centennial management totalled 4.4 million tonnes for the quarter and 17.5 million tonnes on a full year basis.

Sales under management totalled 4.5 million tonnes for the quarter and 17.0 million tonnes for the full year.

The company also said on Tuesday that a final dividend of four cents per share had been declared, payable on October 8.

Centennial shares were one cent higher at $6.00.