Detailed studies are essential in India to evaluate air quality and implement measures for effective control of mining in sensitive locations. A study for this purpose was carried out in the Basundhara area of the Ib Valley coalfield in Orissa State, India. The 24-hr average concentrations of suspended particulate matter (SPM), respirable particulate matter (RPM), sulphur dioxide (SO2) and oxides of nitrogen (NOx) were determined at regular intervals throughout one year at seven monitoring stations in residential areas and two stations in mining/industrial areas. The 24-hr average SPM and RPM concentrations were 312.7–598.4 μg m−3 and 100.2–199.6 μg m−3 in industrial areas, and were 95.6–275.7 μg m−3 and 28.5–86.8 μg m−3 in residential areas. During the study period, 24-hr and annual average SPM and RPM concentrations exceeded the respective standards set in the Indian national ambient air quality standard (NAAQS) protocol in certain residential and industrial areas. However, 24-hr and annual average concentrations of SO2 (residential: 20.5–24.3 μg m−3, industrial: 15.3–30.8 μg m−3) and NOx (residential: 19.7–25.3 μg m−3, industrial: 14.3–33.5 μg m−3) were well within the prescribed limit of the NAAQS in both residential and industrial areas. The temporal variations of SPM and RPM fitted polynomial trends well and on average in the mining area 31.38% of the SPM was RPM. The linear regression correlation coefficients between SPM and RPM and between NOx and SO2 were 0.90 and 0.52, respectively. The kriging technique determined that maximal concentrations of SPM and RPM occurred within the mining site. A management strategy is formulated for effective control of air pollution at source, and mitigative measures should include implementation of green belts around the sensitive areas where the concentration of air pollutants exceeds the standard limit.