(Photo) Courtesy : The Indian Express
Over the years, the mining sector has been the main driver of economic growth all over the world providing necessary resources such as gold, copper, lithium, bauxite, iron ore, coal and rare earth metals. Nonetheless, investments in traditional mining operations have continued to be the playground of large institutional investors, private equity firms, and ultra-high-net-worth individuals only, mainly due to their high complexity, steep entry barriers, and the long lock-in periods.
The mining sector in India is often steeped in scams galore for its lack of transparency during the phases of production, revenue splitting, and asset holding. India has apparently lost about three lakh crore in mining revenue in the last 10 years due to the invisible leakages in the ongoing e-auction of mines across the country. Between 2005 and 2015, estimates suggest a nominal loss of ₹5 Lakh Crore to ₹10 Lakh Crore on current prices due to a lack of competitive price discovery.
Despite holding over 80 billion tons of untapped reserves, the sector remained shackled by the “First-Come-First-Served” (FCFS) regime till 2015. Under FCFS, mineral allocation was discretionary, opaque, and fiscally stagnant. The state was capturing only basic royalties, while the true economic rent was being diverted elsewhere.
After Narendra Modi took over the reins of power in 2014, things started moving and the 2015 Amendment to the MMDR Act (1957) notched up a paradigm shift by transforming the fiscal landscape through mandatory e-auctions. The new e-auction system introduced the “Auction Premium”- a percentage of the mineral value paid over and above the royalty. In high-value sectors like Iron Ore, premiums have soared to 100%–150%, in some cases even more. The apparent success of the auction regime, however, has created a dangerous sense of complacency and there have been reports of heavy leakages.
This national leakage is fueled by three primary components. First, “Grade Arbitrage”—the intentional downgrading of high-grade ore to a lower royalty base—siphons off between ₹15,000 and ₹18,000 crore annually. Second, “Volume Bleeding” via overloading and unrecorded “invisible” dispatches accounts for a yearly drain of ₹8,000 to ₹10,000 crore. Finally, the non-reporting of strategic secondary or associated minerals results in an additional loss of ₹2,000 to ₹4,000 crore each year. Over a ten-year horizon, this cumulative national loss is estimated at a colossal ₹2.5 to 3 lakh crore—a sum that represents the high cost of a “leaky” mineral governance framework.
Countries are increasingly leveraging mineral assets and productions tokenization to move from “Auction Efficiency” to “Extraction Integrity,” ensuring that the sovereign owner captures the full value of its resources. The application of blockchain technology brings the required trust because it gives transparency to all transactions and changes made. Investors are allowed to monitor the project’s progress in real time, which in turn, makes the entire process secure and reliable.
Democratic Republic of Congo (DRC) has been a pioneer in using blockchain-based tokenization to address “visibility gaps” in the supply chain of cobalt and tantalum. They utilize a “Digital Twin” system where each unit of ore is represented as a digital token from the pit-head to the final refinery. This prevents the “mixing” of ethically sourced minerals with unverified production.
As a global leader in mining technology, Australia has adopted tokenization to enhance “Asset Integrity” and streamline logistics. Major mining hubs use blockchain-enabled registries to record immutable “Grade Stamps” during transit, preventing value-mixing and ensuring real-time origin verification. This system effectively plugs the “Grade-Volume Gap” that traditional manual audits often miss.
Brazil has explored tokenization specifically to monetize “latent value” in its vast mineral reserves. By digitizing mineral reserves through tokenization, the country has created bankable digital assets that allow for capital mobilization before physical extraction begins. Canada on the other hand focuses on ESG (Environmental, Social, and Governance) compliance and uses production tokenization to track the carbon footprint of minerals. The framework ensures “Zero Leakage” by hard-linking production data to a blockchain ledger, which prevents data manipulation and ensures 100% revenue integrity.
Needless to say, the advent of blockchain technology is changing the story by tokenizing mining. The new model has turned mining investments into a more transparent, liquid, and globally accessible affair. The digital transformation of industries is coming to the forefront with the mining tokenization services as one of the most influential trends regarding investments and the future of how mining assets are owned, traded, and monetized.
The technology of blockchain is adopted by the financial world and at the same time, mining tokenization promotes the sector to be part of the larger digital asset economy. The transfer of the mining investments is thus easily adjusted to the current digital market, which consequently delivers better global engagement and trading. The major benefits for Mining Companies Using Tokenization are More Efficient Capital Raising, Enhanced Credibility and Investor Confidence, Streamlined Operations through Automation, Global Reach and Investor Diversity.
Investments in the future of mining will be made in tokenized digital ecosystems whereby investors can access the mining projects directly via blockchain platforms. This new digital approach is cutting off the middlemen, thus minimizing investment risk as well as opening up a global marketplace that is more inclusive.
India has taken several targeted regulatory, legislative, and foundational steps that lay the groundwork for tokenizing mining assets. India needs to launch a widespread, fully commercial market for tokenized mines at the earliest. “India should not merely mine its mineral wealth—it should make that wealth visible, verifiable, and investable. Tokenizing mineral assets and their verified production can transform geological resources into trusted digital assets, connect capital with real economic value, and create an auditable chain from discovery to production, sale, and settlement. It is the bridge between India’s mineral potential and its ambition for mineral self-reliance.” observes Dr. Nirmal Kumar Senapati, a natural resource upstream industry veteran (geoscientist and researcher) working presently as the mining advisor to the Bihar government.
The Asset Tokenization (Regulation) Bill was introduced in India’s upper chamber, the Rajya Sabha, last year. The bill was proposed by MP Raghav Chadha, rather than the government, making its passage into law unlikely. The last time a private member bill was enacted as legislation by both houses of parliament in India was in 1970.
Despite originating outside the government, the bill takes a conservative approach. It makes no mention of decentralized finance (DeFi), and its architecture reflects that omission. All tokens must be custodied by a regulated intermediary rather than held in self hosted wallets, and all trading venues must be authorized.
India’s first global financial hub—GIFT City—has initiated India’s first regulatory consultation to create a framework for tokenisation of financial and real‑world assets. While NSE IFSC has not yet launched tokenized or digitally native securities, the proposed framework envisions features such as digital ownership, fractionalisation, smart‑contract‑based compliance, faster settlement, and programmable assets. This makes GIFT City the centre of India’s regulatory exploration of tokenized financial infrastructure—but not yet a live implementation.
Mining Asset tokenization signals the emergence of a new ownership paradigm – transparent, inclusive, and efficient. For investors, developers, policymakers, and entrepreneurs, the opportunity is clear: understand, adapt, and lead the transformation.
