“We are in the process. Regarding coal exchange, we are discussing. Already last week we have taken a meeting. In a little time we will come up with it,” he said on the sidelines of a stakeholder consultation on mine developers and operators and star rating for mines.

Reddy said the exchange will help in providing a larger market for the commodity and in coming up with a transparent benchmark price for it.

In August, Mint reported that the Centre is mulling the creation of a new, independent regulator for the exchange.

An independent regulator with sectoral expertise would be key to providing fairness and transparency to the operations of the exchange, especially after the market was opened up in 2020 to private players to take up commercial mining.

Commercial players are expected to be key suppliers on the exchange along with state-run miner Coal India Ltd.

A draft cabinet note has already been circulated for interministerial consultations. However, the cabinet note has not yet been finalized and sent to the cabinet committee on economic affairs (CCEA), given ongoing deliberations over the requirement of a new regulator.

The coal exchange will be a platform for buyers and sellers of the mineral wherein buyers will have options in terms of the grade of coal and location. 

A large portion of the surplus coal of Coal India and its subsidiaries, after long-term linkage commitments are met, is likely to be traded on the exchange, which may come to around 200 million tonnes annually.

Commercial miners are expected to be key sellers on the exchange.

The plan for a coal exchange comes against the backdrop of unprecedented growth in India’s coal production but slackening demand.

In the previous fiscal year, India’s coal production touched a new high of 997.4 million tonnes, marking an 11.67% increase from FY23. For this year (FY25), the Centre has set a target of 1.08 billion tonnes.

Coal India alone produced 773.6 million tonnes of coal in FY24, 10% higher than FY23.

In another major development, the ministry of coal on Monday opened bids for the 10th round and second attempt of the ninth and eighth rounds of commercial coal mines auction. Out of the 61 coal mines offered in the 10th round, 43 bids have been received for 16 coal mines.