Blockchain For Traceability In Minerals and Ore Supply Chain

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Mining industry, an industry with a high turnover, has always been a target for hackers. In addition, it is dealing with huge amounts of data, which need to be securely stored and be easily available. This forces managers and engineers to look for the safest and most efficient way to fulfil their requirement. Blockchain technology, which is also known as the distributed ledger, can highly resolve this problem.

In blockchain, which benefits from a decentralized system, data are received and recorded by numerous people who are called nodes. Data cannot be tampered by anyone unless they have hacked all nodes, which is currently impossible.

Buyers of metals and minerals are coming under increased pressure to prove that the materials they source are responsibly produced. Tin, tantalum, tungsten and gold (3TG) supply chains are under regulatory scrutiny in the United States and the European Union for their potential contribution to armed conflict in the Great Lakes region in Africa. Recent media attention has also focused on child labour in cobalt mines in the Democratic Republic of Congo (DRC) and water pollution in the South American ‘lithium triangle’. Both cobalt and lithium are key components of lithium-ion batteries that power most smartphones, laptops and electric vehicles (EVs).

The main approach to providing downstream customers with greater assurance around social and environmental sustainability in mining and metals supply chains is by achieving greater supply chain transparency and traceability. As a first part of its research series on traceability, the International Council of Mining and Metals (ICMM) conducted a study on the challenges and opportunities for traceability of materials in metals and minerals supply chains.

The Challenges:

The issues that need to be addressed

  • 1. How can a massive amount of data be recorded for daily work?
  • 2. How can they be securely kept from any tampering or destroying?
  • 3. How can they be updated and accessed based on a real-time frame?

Blockbase’s solutions for corporate actions, tax reporting, data processing, collateral management, and reconciliation software help commercial banks in raising their standards on efficiency and operational control while they move ahead with their strategies in the future.

Barriers to traceability in the metals and minerals supply chain

As a first part of its research series on traceability, ICMM conducted a study on the challenges and opportunities for traceability of materials in metals and minerals supply chains. Through its own research, RCS Global has identified further challenges to robust CoC systems. The following presents a summary of these challenges:

Underlying factors

There are two underlying factors that make it difficult for companies to design robust CoC systems that are able to respond to downstream demands:

  • Non-standard, unilateral customer requests for information: Downstream buyers often request specific information from refiners, smelters, traders, and mining companies in an ad-hoc manner with their own forms and questionnaires that is different from information requested by other downstream buyers.
  • No broadly accepted material control standard: Furthermore, CoC systems require a material control standard. However, there is currently no broadly accepted material control standard for the mining and metals industry as a whole .
These underlying factors add to the following implementation barriers:

Implementation barriers:

  • Points of aggregation: The minerals and metals supply chain features important material aggregation points – primarily at the smelter/refiner level – where minerals and metals from different sources are combined.
  • Points of transformation: Minerals and metals also undergo several processing stages along the supply chain, including crushing, washing, grinding, separation, etc. (depending on the supply chain) during which product characteristics such as size, weight, grade, and price change.
  • A lack of technical capacity: Technical considerations like language, availability of suitable personnel and non-centralized record keeping can all be obstacles, particularly in smaller and fragmented supply chains.
  • Confidentiality concerns: Information about suppliers can have competitive implications for actors in the minerals and metals supply chain. Thus, there may be a reluctance to share supplier information or identities.
  • A lack of standardized CoC documentation and digitization: Research found that CoC documentation between supply chains varies. Furthermore, most CoC systems are still paper-based, which means that there is no central digital database that could be accessed by downstream customers. It also makes CoC systems susceptible to fraud or incorrect data entry.
  • Administrative and governance costs: Costs for implementing a robust CoC system are also quite high, in part due to responding to unilateral requests for information, but also because implementing a sophisticated system that is able to handle the amount of data required as well as audits are costly.

While technology-based traceability solutions, such as the Geotraceability-enabled Better Sourcing platform, exist, blockchain features several significant advantages.

Blockchain Technology

Blockchain is a technology that allows for real-world data to be validated and subsequently stored as an immutable ‘block’ on a collectively owned and distributed digital database. The resulting blockchain is immutable because every block is validated based on previous blocks, making it very difficult to alter the modification of a recorded transaction would require modifying all previous blocks. Blocks are validated either by an algorithm or physical actor. Blocks can be any type of data, including financial transactions, a contract, or a transfer of assets.

The Solution:

Blockchain provides a database onto which supply chain transactions can be recorded. Usually using bar codes,digital tags or serial numbers assigned to physical goods, it allows for those goods to be tracked along a supply chain. Data recorded can include properties of the product, transfer locations, actors involved in supply chain transaction, and adherence to responsible production standards linked to all of the above. In the minerals and metals supply chain, the following properties of minerals (or other properties) could be recorded onto a blockchain system:

  • Weight
  • Quantity
  • Grade
  • 3D images of the material
  • Mineral fingerprints
  • Ownership of the material at a certain supply chain point
  • Life cycle assessments

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