Govt to allow trading of major minerals on exchange from next financial year
India's first exchange for trading major minerals and ores is set to begin operations from the next financial year.
The exchange will initially facilitate trading in five minerals: iron ore, bauxite, chromite, manganese, and limestone.
The Indian Bureau of Mines (IBM) will invite applications from companies interested in operating the exchange.
The stated objective is to improve price discovery and transparency in mineral trading, moving away from opaque, negotiated pricing between miners and buyers.
Indian Bureau of Mines (IBM)
The IBM is a multi-disciplinary government organisation under the Ministry of Mines responsible for the conservation and scientific development of mineral resources (excluding coal, petroleum, natural gas, atomic minerals, and minor minerals) and for regulatory oversight of mining plans. It functions as the national data bank for minerals and prepares the National Mineral Inventory.
Key Details
- Established in 1948, headquartered at Nagpur, headed by a Controller General.
- Functions: scrutiny and approval of mining plans/schemes, conservation studies, environmental oversight of mines, preparation of mineral maps, and technical consultancy to the mineral industry.
- Operates under the Ministry of Mines, Government of India, with four zonal and 13 regional offices.
IBM has been tasked with inviting and evaluating applications from companies to operate the proposed minerals exchange, extending its traditional regulatory/data-bank role into market infrastructure creation.
Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act)
The MMDR Act, 1957 is the principal central legislation governing the regulation of mines and development of minerals in India, under which the Union government prescribes rules for reconnaissance, prospecting, and mining leases, and reserves certain minerals for exclusive central/state allocation. Amendments in 2015 and 2021 introduced auction-based (rather than discretionary) allocation of mineral concessions to improve transparency.
Key Details
- Enacted 1957; mining is a subject on which both Union and State governments legislate, though the Union retains primacy under Entry 54 of the Union List for regulation of mines and mineral development "to the extent declared by Parliament by law to be expedient in the public interest."
- The 2015 amendment introduced mandatory e-auction of mineral concessions for major minerals to replace the earlier first-come-first-served allotment system.
- Instruments created under the Act's amendments include the District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET).
The proposed minerals exchange builds on the MMDR Act's auction-based transparency push by creating a continuous, exchange-based price discovery mechanism for major (non-fuel, non-atomic) minerals, complementing the one-time price discovery that occurs at lease auctions.
National Mineral Policy, 2019 and Price Discovery in Mining
The National Mineral Policy (NMP), 2019 replaced the 2008 policy and set out objectives including a transparent mineral administration system, encouraging private investment through exploration, and improved price discovery mechanisms for minerals, since India historically lacked organised commodity exchanges for bulk minerals (unlike metals, which trade on exchanges such as MCX).
Key Details
- NMP 2019 emphasises auction-based allocation, seamless transition from exploration to mining, and use of technology for regulation.
- India has long had commodity exchanges (e.g., MCX, NCDEX) for select metals and agri-commodities, but no dedicated exchange for bulk minerals like iron ore, bauxite, chromite, manganese, and limestone, which are largely priced through bilateral contracts or reference to international indices.
- Ministry of Mines is the nodal ministry for minerals policy (as distinct from Ministry of Coal for coal, and Ministry of Petroleum for oil/gas).
The new minerals exchange directly operationalises the National Mineral Policy's price-transparency objective by creating a formal, exchange-traded price discovery venue for major minerals for the first time.
- Exchange to initially trade five minerals: iron ore, bauxite, chromite, manganese, limestone.
- Nodal implementing body: Indian Bureau of Mines (established 1948, headquartered Nagpur), under the Ministry of Mines.
- Governing statute for mineral regulation: MMDR Act, 1957 (amended 2015, 2021, 2023).
- Targeted launch: next financial year (2027-28).