The borehole coal samples of Dhulia North Block from the Rajmahal Basin, Eastern India, were systematically analyzed based on the chemical composition and concentration of major and trace elements (including rare earth elements, REEs) to assess the distribution of REEs and their environmental implications with utilization potential. The Dhulia North Block coals are characterized by the predominant major oxides of SiO2, Al2O3, and Fe2O3, accounting for 94% of the total ash composition, indicating the presence of quartz, clay-rich minerals, and pyrite. Compared with the average world coal ash, the total REE content in the analyzed samples ranged from 341.0 to 810.4 ppm, which is substantially higher. Hot humid climate conditions with intermediate igneous source rocks of the basin were demonstrated by the major oxide ratios (Al2O3/TiO2 < 20) and plots of TiO2 with Al2O3 and Zr. The redox-sensitive elements such as V, Ni, Cr, and Co found in the Dhulia North Block coal indicate that an oxic sedimentary environment existed in the basin when coal was formed. The low sulfur content (1% in most samples) indicates freshwater conditions in the basin at the time of organic matter deposition. The outlook coefficient (Coutl) varies between 0.7 and 1.6, indicating that the Dhulia North Block coals are a prospective source of REEs. The Dhulia North Block coals are characterized by low H/C and O/C atomic ratios ranging from 0.56 to 0.90 and 0.10 to 0.22, respectively, and contain type-III kerogens, indicating gas-prone source rock. Further, the basic-to-acid oxide ratio suggested that Dhulia North Block coals were suitable for utilization during combustion processes.