India mulls setting up mineral and metal trading exchange, opens door for full mine sales

The move, discussed during a Cabinet meeting last week, comes amid a push towards increase in mineral production and self-reliance in the backdrop of rising supply chain disruptions.  
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BHAGYA PRAKASH

Government is mulling amendments in the existing legal framework to make way for a mineral and metal trading exchange on the lines of London Metal Exchange (LME) or Shanghai Futures Exchange (SHFE).

According to a Cabinet note moved on August 7, the contents of which were reviewed by businessline, this structured marketplace is being envisaged to ensure better price discovery.

The move, discussed during a Cabinet meeting last week, comes amid a push towards increase in mineral production and self-reliance in the backdrop of rising supply chain disruptions.

In India, MCX, a publicly listed entity, is thus far the largest commodity derivatives exchange based out of Mumbai. It facilitates online trading of various commodities like gold, silver, crude oil and natural gas, among others.

Enabling amendments – with provisions to setting up of exchanges – are to be made in the Mines and Minerals (Development and Regulation) Amendment Bill, 2025. The provisions are to be taken up for inclusion in the existing statute which the government intends to move in the ongoing session of Parliament.

The current Mines and Minerals (Development and Regulation) Act does not have any provision for development of market for minerals or such a mechanism.

Global best practices

In the Cabinet note, the Mining Ministry referred to global best practices where most mineral rich countries have developed an efficient trading exchange “supported by a legal framework”. Normally, miners are allowed to utilise or sell minerals according to their business requirements on these exchanges.

“Major mineral trading exchanges in the world like LME, Chicago Mercantile Exchange, SHFE, ASX Metals Market in Australia set reference prices for mineral and metals….There is a need to develop similar mineral trading exchanges in the country…” the Cabinet note said.

India’s mineral pricing mechanism, at present, relies on a combination of factors, including self-declared prices by mining companies, Indian Bureau of Mines (IBM) assessments, and some global benchmarking. The IBM publishes average sale prices (ASP) for different mineral grades based on self-declared prices.

In some cases, future contract settlements are done on globally benchmarked price points, including the LME.

“Efforts are required to be made for establishment of competitive and transparent mineral trading exchanges where minerals, its concentrates or processed forms (metal) are trade(d)..” the note mentioned.

Removing restrictions

Another proposed amendment pertains to removing restrictions on sale of minerals from captive mines.

The second amendment proposes to remove the limit on sale of minerals from captive mines by omitting the phrase “up to 50 per cent of the total minerals produced in a year”. This would open up the mining sector for further investments. “It is felt necessary to fully liberalise the regime,” the note said.

At present, the MMDR allows captive mines to sell up to 50 per cent of their produce in the open market, after fulfilling their own requirements.

The amendment will “remove artificial restrictions” thus enabling “the miners to ensure optimal mining of mineral resources”.

“It will facilitate increase in production and supply of minerals,” the note read.

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Published on August 10, 2025

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