The Ministry of Mines of India has proposed a major overhaul of the country’s iron ore pricing system, recommending that domestic prices be benchmarked to international indices such as those published by S&P Global Platts or similar reputable market agencies.
The proposal, released on June 20 via a government notification, invites industry feedback and is part of a broader push to enhance pricing transparency and curb revenue underreporting by mining companies.
Currently, the Indian Bureau of Mines (IBM) calculates the average sale price (ASP) of iron ore based on self-declared prices submitted by mining firms. This ASP is used to determine royalties and District Mineral Fund (DMF) contributions owed to state governments.
Under the new proposal, IBM would compute daily iron ore prices (for 60% to below 62% Fe grade fines) in Indian Rupees, referencing daily international market data—effectively ending the self-declaration model.
According to the ministry, this move would:
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Ensure price uniformity across states
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Limit the scope for manipulation of high-grade ore prices
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Boost royalty and DMF collections for mineral-rich states
Mining companies in India are currently required to pay 15% of their sales revenue as royalty and an additional 2% toward the DMF, which funds development projects in mining-affected regions.
The ministry believes that using trusted global indices will lead to more accurate royalty calculations, reduce state-level revenue losses, and align India more closely with global pricing practices.
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