Open Mineral, a Swiss trading platform for metal concentrates is bringing together a blockchain consortium to improve mineral supply chains, including trading and logistics.
According to Reuters, Open Mineral will collaborate with ConsenSys, a US blockchain startup. Together they will establish Minerac, to optimize mineral trading and supply chains. According to Boris Eykher, CEO of Open Mineral, “Logistics are complex, financing is difficult to acquire and the entire process is very paper heavy.”
Moving the process over to a blockchain would result in solving each of these problems. An entire supply chain could be tracked, transparently, in a way that identifies bottlenecks and other problems. In addition, the data stored on a decentralized ledger is immutable, meaning that fraud and abuse can also be reduced. With this information, companies can make data-driven decisions to cut costs while improving the reliability of the vendors they choose to do business with. In this way, blockchain will ultimately simplify the mineral trading process, and companies will see greater profits, while customers may also see better prices for the goods produced from these materials.
ConsenSys is an Ethereum token, built on the ERC-20 smart contract platform. The group has already created consortiums for the oil industry and trade finance. With these models already developed in other industries, layering in mineral tracking is relatively easy, as systems that have already been developed can be reused.
Several mining companies have already joined the consortium, while other companies are in talks with the group, including various financial institutions, according to Eykher. With an injection of institutional capital, we could see mineral supply chain technology explode, with positive benefits all around. For example, it can be difficult to track the source of diamonds and other minerals, to make sure that they are conflict-free. Cobalt, used for rechargeable batteries such as those found in mobile devices, is another example of a mineral that has human rights issues associated with its extraction, to the point where child slaves have been used in various mining operations in places such as the Democratic Republic of Congo. With an immutable record of the supply chain in place, industries would be able to self-police, without the need for unnecessary government intervention. In addition, buyers may review the record to verify the source of all materials produced, and reject any that come from regions they don’t want to buy from.
In terms of compliance with government regulators, the technology creates efficiencies as well. Suppliers can prove that they are not violating any trade sanctions with relative ease, meaning lower costs and faster processing.
Open Mineral was created by former traders from the commodity house, Glencore in 2017. Their goal was to cut out the middlemen in the mining business, saving the companies tremendous costs on deals for mineral concentrates. With Minerac, the group plans to connect the minerals supply chain across all points, including shipping, surveying, warehousing and financing, using a simple process that includes producing sealed bags of minerals that are stamped with tamper-resistant identification markers that can be scanned at every point from end to end.