What is commercial mining? 

• In 2020, the Government of India opened the coal sector for commercial mining by private players more than 45 years after the nationalization of coal mines in the country. 
  • Before that, coal blocks were allocated through auctions.

• • Commercial mining allows the private sector to mine coal commercially on a revenue-sharing model without placing any end-use restrictions.
  • Removing end-use restrictions marked the end of the captive mining regime.
    • Captive mining is the coal mined for a specific end-use by the mine owner, but not for open sale in the market.  

• A revenue sharing mechanism instead of the earlier fixed price per tonne will introduce competition, transparency and private sector participation in the market.

• The private firms now have the option of either gasification of the coal or exporting it. They can also use it in their own end-use plants or sell them in the markets. 
• Further, with 100 per cent foreign direct investment allowed in the coal sector, global companies can also participate in the auctions. 
• The complete freedom to decide on sale, pricing, and captive utilisation aims to attract many private sector firms to participate in the auction process. 
• The government expects these steps will generate employment and reduce India’s import bill.

Why in News?

• The Ministry of Coal has issued allocation orders for 3 coal mines recently.