India: Ministry of Mines unveils Mineral Exchange Rules, 2026

• India moves toward transparent mineral trade ecosystem
  
  
• IBM gains wider oversight over mineral trading

  
  
  

India's mineral sector could witness a major structural shift following the notification of the Mineral Exchange Rules, 2026 by the Ministry of Mines on 30 June. The framework lays the foundation for a regulated, delivery-based mineral exchange ecosystem aimed at improving transparency, standardising trade practices and strengthening price discovery across mineral transactions.

The rules establish a formal structure for electronic bidding, contract execution, physical delivery, assay certification and settlement under the supervision of the Indian Bureau of Mines (IBM), which has been designated as the central regulatory authority for the proposed exchange framework.

Delivery-based exchange structure proposed

The proposed exchange model is largely focused on physical delivery-based trade rather than speculative futures trading. Transactions on the platform will involve actual dispatch and delivery of minerals, supported by logistics coordination, third-party assay verification and exchange-backed settlement systems.

As outlined in a framework, the transaction cycle will include electronic sell and buy bids, algorithm-based price discovery, contract execution, dispatch, assay verification and payment settlement through the exchange system.

The framework also introduces provisions against cartelisation, circular trading, insider trading and market manipulation, highlighting the governments intent to establish a monitored and transparent mineral marketplace.

Industry participants noted that the current framework appears to be designed primarily for spot or delivery-linked contracts. However, detailed operational guidelines regarding contract structures, settlement mechanisms and participation rules are still awaited and are expected to provide greater clarity on the eventual market structure.

IBM's role expands beyond technical regulation

One of the most significant developments under the framework is the expansion of IBM's role beyond technical mining oversight. The authority will now approve contracts, pricing methodologies, exchange bye-laws and operational mechanisms, while also overseeing inspections, investigations and regulatory compliance.

Industry participants noted that the framework effectively positions IBM as both a mining regulator and a market regulator for mineral trade. However, some stakeholders also pointed out that the rules currently do not provide detailed clarity regarding appellate mechanisms or dispute escalation frameworks beyond the authority level.

Participants further observed that certain exchange-like functions introduced under the framework - including clearing, settlement, surveillance and algorithm-based matching - could eventually require clearer coordination between IBM and financial market regulators if the platform evolves further over time.

Transparent pricing may support benchmark development

The exchange framework aims to institutionalise transparent price discovery through independently audited electronic matching systems. Market participants believe the platform could eventually support development of India-centric benchmark pricing references for minerals, particularly iron ore, where pricing has historically remained fragmented across bilateral and regional trade channels.

The rules also mandate maintenance of centralised trade databases covering mineral grades, quantities and transaction records, which could improve market visibility and regulatory oversight.

Industry participants indicated that a successful exchange ecosystem could gradually improve transparency in domestic mineral procurement and create more reliable market-linked reference prices over the medium term.

Independent assay system to improve trade standardisation

Another important feature is the introduction of an independent assay and certification mechanism. Only accredited agencies recognised by the National Accreditation Board for Testing and Calibration Laboratories (NABL), Bureau of Indian Standards (BIS) or Department of Science and Technology (DST), and empanelled by the exchange, will be authorised to certify mineral quality and quantity.

The final settlement value of traded material will be adjusted based on certified grade and quantity, which could help reduce disputes around Fe content, moisture, alumina and silica variation, especially in iron ore trade.

Industry participants noted that standardised assay-linked settlement could improve confidence among buyers and sellers, particularly in merchant iron ore trade where quality disputes and quantity adjustments remain common.

Governance safeguards and ownership caps introduced

The framework introduces governance norms aimed at preventing concentration of control within the exchange ecosystem. Ownership caps have been prescribed for members and clients, while the exchange operator itself must maintain a minimum net worth of INR 50 crore at all times.

Industry participants believe these provisions are intended to reduce market capture risks and strengthen institutional credibility. However, some stakeholders also observed that the relatively high capital threshold and compliance requirements could favour larger institutional or organised participants during the initial stages of implementation.

Key industry concerns remain unresolved

Despite the broader positive intent, industry participants highlighted several unresolved operational and regulatory concerns.

One of the biggest challenges relates to standardisation of iron ore contracts. Participants pointed out that Indias iron ore market consists of multiple product variations across lumps, fines, pellets, concentrates, beneficiation products and differing Fe and impurity bands. This could complicate creation of standardised exchange contracts and may affect liquidity during the initial stages of implementation.

Stakeholders also noted that India's mining sector remains highly fragmented, with a large number of small and medium lease holders. According to market participants, compliance requirements, security deposit obligations, assay costs, logistics coordination and digital infrastructure requirements may disproportionately affect smaller miners.

Another major uncertainty relates to royalty calculation mechanisms. Industry participants observed that the notification does not clearly specify whether exchange-linked prices may eventually replace IBM's existing Average Sale Price (ASP)-based royalty framework, or whether both systems may temporarily coexist during a transition phase.

Participants indicated that greater clarity may eventually be required regarding:

• transition methodology from ASP-linked pricing
  
  
• treatment of thinly traded contracts
  
  
• possible dual royalty mechanisms during transition
  
  
• integration of exchange-linked prices with royalty assessment systems
  
  

The lack of clarity on royalty linkage remains a key concern for miners as well as state governments.

Operational framework still awaited

Industry experts further noted that the current notification primarily establishes the legal and governance structure for mineral exchanges, while critical operational details are still awaited.

Market participants believe the long-term success of the framework will depend on liquidity generation, participation by major miners and PSUs, practical contract design, regulatory clarity and the ability to accommodate Indias highly diversified mineral product landscape.

Overall, the Mineral Exchange Rules, 2026 mark a significant policy step towards formalising India's mineral trade ecosystem through transparent and regulated exchange-based mechanisms. However, the operational architecture and implementation framework will ultimately determine the effectiveness and scalability of the proposed mineral exchange system.