India is poised to transform its mineral market with plans to introduce mineral exchanges, aiming to enhance price transparency and liquidity. This move, supported by legislative changes, seeks to establish credible domestic benchmarks for minerals like iron ore, addressing long-standing issues of fragmented markets and information asymmetry.
The initiative comes as the country intensifies its focus on infrastructure, renewable energy, and advanced manufacturing. The proposed exchanges are expected to provide a transparent platform where prices reflect actual demand and supply dynamics, moving away from traditional negotiation and auction methods.
Power trading solutions provider PTC India has announced plans to invest ₹65 crore in a wholly-owned subsidiary to set up and operate a mineral exchange. Similarly, the Multi Commodity Exchange of India (MCXI) has established the MCX Mineral Exchange of India Limited as a subsidiary. These developments follow amendments to the Mines and Minerals (Development and Regulation) Act, which laid the groundwork for such exchanges.
The regulatory framework, outlined in the Mineral Exchange Rules, 2026, places the Indian Bureau of Mines (IBM) under the Ministry of Mines in charge of overseeing these exchanges. The IBM will regulate mineral exchanges for minerals excluding coal, lignite, and atomic minerals.
Small and medium miners, who often lack bargaining power against large buyers, stand to benefit significantly. The creation of market-driven prices could improve cost planning for industries such as steel, aluminum, cement, and renewable energy equipment manufacturing.
The exchanges are expected to initially focus on physical mineral ores, starting with bulk minerals like iron ore, bauxite, limestone, and manganese ore. Unlike existing commodity bourses that primarily deal with processed products, these exchanges will cater to raw mineral resources. Iron ore, given its scale and industrial importance, is likely to be the first major contract.
India's iron ore production has seen a substantial increase, from 152 million tonnes in 2013-14 to over 300 million tonnes recently, driven by strong steel demand. A transparent market for iron ore is crucial, as steel producers currently rely on negotiated contracts, captive mines, auctions, and benchmark prices. An exchange-based mechanism could provide a more visible domestic reference price.
Future phases of the exchanges might include minerals critical for electric vehicles and renewable energy, such as lithium, nickel, cobalt, graphite, and rare earth elements. India has already begun auctioning critical mineral blocks to reduce its reliance on imports.
The success of these exchanges will depend on liquidity, requiring active participation from both buyers and sellers. Physical minerals present unique challenges, including quality variations, transportation, storage, and delivery issues. Standardizing mineral grades will be essential to facilitate trading.
To ensure the exchanges complement existing mining regulations, rather than adding compliance burdens, standardization of mineral grades and testing is crucial. Transparent pricing will require sufficient data on traded prices, quantities, and grades to establish meaningful benchmarks. Monitoring for market concentration and manipulation will also be necessary.
The exchanges aim to make participation commercially viable by easing access for smaller miners and regional buyers while maintaining robust delivery and settlement safeguards. If successful, these exchanges could become a significant instrument of industrial policy, providing a common reference point for mineral prices across Asia.
As the global contest for mineral security intensifies, India's mineral exchanges could extend beyond local trading, offering a reference for mineral prices in Asia, the world's largest regional market for critical-mineral trade. In 2024, Asia accounted for approximately $757 billion in critical-mineral exports and nearly $1.37 trillion in imports.
