Coal ministry to auction 25 commercial mines in FY26 to boost output

The auctions aim to expand coal production capacity, replace depleted mines and ensure long-term energy security as India targets net zero via diversification

The Ministry of Coal, in its second action plan for 2025-26 (FY26), outlined strategies to hold three auctions for 25 commercial mines as part of the government’s efforts to boost domestic production, reduce imports, and ensure long-term energy security.

 

Seven commercial mines are expected to start production in FY26, according to ministry’s estimates.

 

The ministry had set a target to open 100 new mines to create an additional production capacity of 500 million tonnes (mt) every year by FY30. Of this, 13 mines were operationalised in FY25 with a capacity of 83 mt.

 

To achieve the target, the ministry proposed to operationalise over 20 new mines with an aggregate capacity of more than 80 mt per year in FY26, including coal public-sector undertakings, commercial, and captive mines. Plans for an ‘on-demand’ coal supply capacity to consumers by FY47 are also underway, for which additional coal capacity is required.

 

The ministry also lowered its production target for FY26 at 1.15 billion tonnes (bt), from 1.19 bt set in November. However, it is higher than the country’s FY25 production of 1.05 bt.

 

For FY26, coal production and dispatch from commercial mines is aimed at 203.4 mt. Coal dispatch from captive and commercial mines in FY25 stood at 190.4 mt.

 

The ministry will “provide coal linkages to consumers without any requirement of specific use in addition to present end use-based linkages". However, this will require amendment to the non-regulated sector linkage auction policy of 2016.

 

Mineral Concession Rules (1960) will be amended to effectively implement the guidelines required for preparation of the mining and mine closure plan for coal and lignite mines, 2005, which was  issued on January 31.

 

This will allow the mining plan to cover an area beyond the block boundary – where such an area bears coal but extraction of which is not feasible. 

 

For FY26, the ministry proposed to commission 3x660 Mw Ghatampur thermal power plant (TPP) and begin two pithead projects of Coal India. One 660 Mw unit of Ghatampur TPP was operationalised in November last year as the ministry looked to diversify the coal PSUs in setting up new pithead coal-based TPPs with the latest energy-efficient super or ultra critical technologies.

 

To achieve net-zero electricity consumption via solarisation, the ministry proposed completion of the target under PM Suryaghar Yojana and commissioning of 810 Mw RRVUNL solar project in Rajasthan in FY26.

 

Given the availability of energy sources and cost competitiveness, coal for India is likely to be the main contributor to new capacity, Moody's Ratings said on Thursday.

 

Rapid growth in solar generation capacity will change the energy and geography mix of the country’s power market, driving the need for transmission investment, the agency said. Successful execution of capacity building and transmission lines will be critical for the country's carbon transition, it added. Overall grid investment requirements will likely average close to 1 per cent of India's real GDP over the next one decade.