India considers creating a national iron ore exchange – Reuters

India is considering the creation of the country’s first iron ore exchange to determine the domestic selling price of raw materials. The proposal was submitted by a group of experts appointed by the government, Reuters reports, citing a document and a source familiar with the matter.

After the country’s mining ministry pointed out that some ore producers are trying to artificially lower the average selling price to pay lower royalties to the state, the government formed a group late last year to develop an alternative mechanism for determining domestic prices.

«As a long-term measure to solve the issue of transparency in the returns being received, (the) Ministry of Mines should develop a National Iron Ore exchange, mandating the buying and selling of iron ore on the online platform,» the group of experts said in its recommendations.

The proposed exchange will record real-time transactions and physical deliveries of iron ore, the document says. It is also noted that once implemented, the average selling price for each state and grade can be automatically published monthly based on a weighted average of monthly sales on the online platform.

Currently, prices for the same grade of ore vary widely across the country, creating an anomaly that experts believe makes it easier for miners to artificially lower prices to avoid higher royalty payments.

According to the source, the Indian government will consider the recommendations of the expert group. According to the document, it is also recommended to use blockchain technology on the exchange.

Experts did not support the use of an international index to determine the average selling price of ore, as the world price is heavily influenced by the Chinese economy and steel demand, and is also very volatile compared to domestic prices. They believe that such a linkage will have serious implications for the planning of raw materials and the export competitiveness of the Indian steel industry.

As GMK Center reported earlier, in 2023, India increased iron ore production to a historic high of 282 million tons, up almost 14% year-on-year. In particular, miners increased volumes due to stimulated demand due to the growth of steel production in the country, and export demand also increased.