Mixed Response in 12th Commercial Coal Block Auction: Only Two Bids Received for Six Underground Mines

In a crucial development for India’s coal sector, the Ministry of Coal opened the technical bids for six underground coal blocks on Wednesday, June 18, 2025, under the 12th round of commercial coal block auctions. The results revealed a lukewarm response from the private sector, with only two of the six underground blocks receiving bids, highlighting the persistent challenges in attracting investors to deep mining operations.

Overview of the Auction

This 12th round of commercial coal block auctions specifically focused on tapping underground coal reserves — a move aligned with the government’s broader strategy to diversify coal extraction beyond open-cast mining. These underground mines, though resource-rich, are technically complex and capital-intensive, which may explain the cautious participation.

According to the Ministry of Coal, the bid opening was conducted in a transparent manner, and the auction process followed the established norms under the Commercial Mining Scheme launched in 2020.

Low Bid Turnout Raises Concerns

Out of the six underground blocks that were on offer, only two blocks received valid technical bids from private players. The names of the bidding companies and specific blocks that received interest have not yet been disclosed by the Ministry.

Industry analysts suggest that underground coal mining continues to pose significant technical and economic challenges. These include high development costs, safety concerns, and slower output compared to open-cast mining. Additionally, deep mining requires advanced machinery, skilled labor, and long gestation periods before commercial production begins — factors that can deter aggressive bidding.

Government’s Push for Commercial Mining

The Government of India has been aggressively promoting commercial coal mining as part of its vision for energy self-reliance and reducing dependence on coal imports. Since the launch of the first commercial auction round in 2020, over 100 coal blocks have been successfully allocated, mostly in the open-cast category.

This 12th round was unique in that it exclusively offered underground coal blocks, aiming to test investor appetite and encourage technological innovation in underground mining. While the response has been underwhelming, the Ministry has reiterated its commitment to attracting private participation through policy support and infrastructural incentives.

Industry Reaction

Coal industry insiders cite several reasons for the tepid response:

• High Operational Costs: Underground mining costs can be nearly double compared to open-cast operations.

• Longer Lead Time: It takes significantly longer to start production in underground mines due to complex clearances and development phases.

• Safety and Labour Issues: The depth and conditions of underground mining increase risks and require stricter safety protocols.

• Limited Technology Adoption: Many Indian firms still lack access to cutting-edge underground mining technologies.

What Lies Ahead

The Ministry of Coal is expected to re-evaluate the strategy for promoting underground coal mining. Measures could include offering financial incentives, technology partnerships, or bundling underground blocks with more attractive open-cast mines to make them viable.

Despite the subdued response, the government remains optimistic about the long-term potential of underground mining, especially in states like Jharkhand, Chhattisgarh, and West Bengal where surface coal deposits are depleting and deeper reserves remain untapped.

The 12th round of commercial coal block auctions has once again highlighted the structural challenges in promoting underground coal mining in India. While the interest in two blocks signals a tentative step forward, broader policy and economic measures may be needed to make underground coal mining a commercially attractive proposition in the future.