KOLKATA (miningweekly.com) - India’a Coal Ministry is working on an incentive package to boost underground mining, which could include differential royalty rates and investment-linked tax holidays.

The Ministry’s initiative followed recommendations from India’s Planning Commission to increase production from underground mining through the introduction of new projects and the rapid adoption of technologies for mass production from depths of more than 300 m, a Coal Ministry official said.

A draft note on the incentives for underground mining had been forwarded for consideration to a Group of Ministers headed by Agriculture Minister Sharad Pawar, which was constituted by the Indian Prime Minister to tackle issues relating to the coal sector.

The draft note observed that the number of new underground mine projects was currently negligible and pointed out that production from existing mines was showing a falling trend over the past several years.

The Coal Ministry identified that one of the major hurdles in incorporating mass production technologies in underground mines was the vastly varying methods of mining in India.

While some underground mines were fully mechanised with power-supported longwall and shortwall, there were others with semi-mechanised bord-and-pillar with side discharge loaders, while others were operated with mixed loaders.

The Ministry has directed the Central Mine Planning and Design Institute, a wholly owned subsidiary of giant State-controlled Coal India Limited (CIL), to identify explored coking coal assets which could be taken up for underground mining during India’s current twelfth Five Year Plan, which ends in 2017.

According to officials the proposed incentive package would also be placed before a committee of experts.

Mining Weekly has previously reported that the Coal Ministry would be setting up a committee of experts to compile a long-term strategy on capital investments and technology upgrades to increase production from CIL's and Singareni Collieries Company's underground coal mines.

In 2012, the opencast coal mines accounted for 488-million tons of production, while production from underground mines was only 51-million tons.  Over the years, the share of underground mines’ contribution to total domestic coal production has fallen steadily from 18.51% in 2002/03 to 13.39% in 2006/07, and 9.6% in 2011/12.