India plans to set up iron ore exchange

This proposition originated from a panel of experts appointed by the government.

Following observations from the India Ministry of Steel indicating certain ore producers' attempts to artificially deflate average selling prices to minimize royalty payments to the state, the government convened a panel late last year to devise an alternative mechanism for pricing domestically.

The expert panel's recommendations underscore the necessity of developing a National Iron Ore exchange as a long-term solution to address transparency issues in revenue generation, mandated to oversee iron ore transactions through an online platform, as stated in the document.

The envisaged exchange is projected to document real-time transactions and physical iron ore deliveries. Moreover, upon implementation, the monthly average selling price for each state and grade can be automatically disclosed, based on a weighted average of monthly sales via the online platform.

Presently, disparities in prices for identical ore grades across the nation create a discrepancy, facilitating miners' ability to artificially deflate prices to evade higher royalty payments.

Contrary to using an international index to ascertain the average selling price of ore, experts advise against it due to the significant influence of the Chinese economy and steel demand on global prices, which are notably more volatile compared to domestic rates. Such a linkage, they argue, could significantly impact raw material planning and the export competitiveness of India's steel industry.