In less than 14 months, an idea to bring India’s fragmented market onto a common electronic platform germinated from legislative intent to a formal regulatory framework and, finally, setting the stage for establishing mineral exchanges.
The proposed exchanges cobbled an ambitious plan, ensuring a transparent marketplace where representative prices reflect demand and supply rather than relying on fragmented negotiations and auctions.
India’s mining sector has historically faced challenges on price transparency, fragmented markets and information asymmetry.
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Seeking to effectively address the issues in the sector in a holistic way, the latest institutional reforms may result in the enhanced industrial competitiveness, investment flows and supply-chain resilience.
The proposed exchange framework will spell out how miners sell output, how manufacturers procure raw materials and how India establishes credible domestic reference prices for industrial minerals.
The move comes at a time when minerals are fast turning crucial to the country’s economic security and also when India is increasingly focusing on infrastructure, renewable energy, electric vehicles, defence equipment, advanced manufacturing and clean energy.
Power trading solutions provider PTC India this week said its board has approved incorporation of a wholly-owned subsidiary with an investment of ₹65 crore to set up and operate a mineral exchange. MCXI (Multi Commodity Exchange of India) has established MCX Mineral Exchange of India Limited as a wholly owned subsidiary.
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Origins of mineral exchange
The amendments to the Mines and Minerals (Development and Regulation) Act provided the legal bedrock for the exchange, paving way for coal exchanges, marking a paradigm shift in marketing by moving from the traditional “one-to-many” sales model to a competitive “many-to-many” trading platform.
Section 18B of the MMDR Act provides for promoting markets, including trading of minerals through mineral exchanges.
The Ministry of Mines subsequently framed the Mineral Exchange Rules, 2026. The regulatory responsibility will rest with the Indian Bureau of Mines (IBM) under the Ministry of Mines. The government has designated IBM as the authority to register and regulate mineral exchanges for minerals other than coal, lignite and atomic minerals.
Need for the exchanges?
Small and medium miners often have limited bargaining power when compared with large buyers.
The biggest advantage will be the creation of market-driven mineral prices, which can improve cost planning especially in industries such as steel, aluminium, cement and renewable energy equipment manufacturing.
Digital trading platform can provide visibility on transaction volumes, quality specifications and prevailing prices. This could reduce information disadvantages faced by smaller miners.
India — with significant mineral resources — has struggled to attract large-scale exploration investment, calling for reforms in areas such as exploration, geological data availability, logistics and investment conditions, as mentioned by NITI Aayog.
Tansparent market could encourage exploration companies by improving visibility of future demand and pricing.
The proposed exchanges might initially see physical mineral ores (spot, delivery-based contracts), beginning with bulk minerals such as iron ore, bauxite, limestone and manganese ore.
The government has already indicated that the exchange will initially deal with ores — the direct output from mines — rather than processed metals.
While existing commodity bourses mostly see trading of processed products, the proposed mineral exchange aims to create a marketplace for raw mineral resources.
Iron ore, in which India has a considerable say, is seen as a strong contender for the first major contract because it combines scale, liquidity and industrial importance.
Buoyant steel demand led to India’s iron ore production witness significant jump from 152 million tonnes in 2013-14 to over 300 million tonnes recently.
A transparent iron ore market is important as steel producers currently depend on negotiated procurement contracts, captive mines, auctions and benchmark prices. An exchange-based mechanism could create a more visible domestic reference price.
Lithium, nickel, cobalt, graphite and rare earth elements may figure in the subsequent phases as the country expands domestic mining and processing capacity for EVs, batteries, renewable energy and defence technologies. India has already been auctioning critical mineral blocks to reduce import dependence.
The exchanges are slated to begin as electronic delivery-based physical marketplace, meaning buyers and sellers trade actual mineral quantities rather than only financial contracts.
The success of the exchanges hinges on liquidity, which in turn depend on participation of enough buyers and sellers.
Unlike financial assets, physical minerals involve supply chain issues including quality variations, transportation, storage and delivery. Therefore, standardisation of mineral grades will be crucial, without which, trading may remain difficult.
The new exchanges should complement the existing mining regulations rather than creating additional compliance burdens.
The mining sector, which already has logistical and regional disparities, could also see a small number of large producers or buyers could dominate trading and weaken competition
Accord priorities
Standardise mineral grades and testing because consistent specifications and independent assaying are essentialities for comparing offers.
Transparent price through publishing sufficient data on traded prices, quantities and grades to establish meaningful benchmarks.
Monitor dominant participants, unusual trading and coordinated bidding to prevent market concentration and manipulation.
Make participation commercially viable by easing access to smaller miners and regional buyers, while maintaining robust delivery and settlement safeguards.
Bottomline
The regulatory and legal architecture have now been made ready; it is for buyers, sellers and the prices they discover have to give life to the exchange(s).
If the exchange attracts sufficient liquidity, curbs market concentration and establishes credible benchmarks, it can potentially become a robust instrument of industrial policy.
As the global contest for mineral security intensifies, India’s Mineral Exchanges could be more than a local trading platform, providing a common reference point for mineral prices across Asia, which is already the world’s largest regional market for critical-mineral trade.
In 2024, it accounted for about $757 billion in critical-mineral exports and nearly $1.37 trillion in imports, according to UN Trade and Development.
