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According to some sources, a government-appointed panel has proposed the establishment of India's first iron ore exchange to determine the domestic sale price of the major steelmaking raw material.
The federal government established a panel late last year to devise an "alternative mechanism" to set domestic iron ore pricing after the Ministry of Mines revealed that certain iron ore miners attempted to artificially maintain the average sale price low to pay reduced royalties to the government.
According to the document, the panel recommended that "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."
According to the document, the proposed exchange would track both actual delivery of iron ore and real-time transaction data.
"Once the exchange is implemented, ASP (average sale price) for each state and grade can be auto-published every month, based on the weighted average of monthly sales on online platform," it said.
Currently, prices of the same grade of iron ore differ widely across the country, creating an anomaly that the panel believes makes it easier for miners to lower rates artificially to avoid higher royalty payments to the government.
India's cabinet will consider the panel's recommendations, said the source who could not be named because the proposal is not public. According to the document, the panel has also recommended using blockchain technology at the exchange.
The technology allows stakeholders such as miners, traders, buyers, and government agencies to quickly and securely share verifiable information.
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