The mining industry should focus on developing regional blockchain platforms and partnerships with governments, regulators and consumers because it is not yet ready to launch a unified platform for critical minerals, say industry experts.
Environmental, social and governance (ESG) targets mean manufacturers must be transparent over where their components come from, particularly minerals used in batteries and electronic goods.
Mines are at the beginning of mineral supply chains, and mining operators need to prove they extract minerals ethically and sustainably. Otherwise, their businesses and reputations may suffer.
This issue is particularly true in regions with high deposits, and miners should concentrate on building traceability at source and regionally to get the best outcome for customers and pursue direct sourcing agreements with end users.
No single platform
According to Gopikrishnan Konnanath, senior vice president and global head of engineering and blockchain services at Infosys, an international standard for "regulatory compliance and responsible sharing" in the mining industry is "a long way ahead".
Konnanth said the mining industry's challenges are "unique" because it still relies heavily on "human input for sourcing" and is "heavily regulated" country-to-country.
He commented that a specific and customisable blockchain platform "which is built ground up for the mining industry" would require collaboration between government and industry leaders.
A growing need for traceability has pushed other industries to launch blockchain-based logistics platforms. A significant example is TradeLens, run by container shipping company A.P. Moller-Maersk and IBM, which specifically tracks container trade.
Konnanath said that the success of TradeLens has "been an eye-opener for many naysayers" in the mining industry, and stakeholders could benefit from something similar.
"We would hope that directly integrating into an already existing industry blockchain alliance like TradeLens would do the magic," Konnanath told Mining Magazine.
Such a system would enable the mining industry to "better communicate with stakeholders" by achieving "real-time inventory visibility across the mining value chain".
However, he believes a platform of such size and breadth in the mineral supply chain, with mining companies at the centre, is unlikely due to a lack of global regulatory standards, with compliance remaining governed nationally or regionally.
Many platforms coming together
Marcus Scaramanga, chief executive officer and founder of blockchain provider Minexx, shares the scepticism about a global blockchain platform but said that a confluence of more local ones was more likely, with smaller-scale deployment still enabling transparency and traceability.
If blockchain can be implemented nationally, it could still improve transparency further along the supply chain and at the same time help upgrade equipment and infrastructure in mines, Scaramanga explained.
"Overall, I would say we don't need one [a single blockchain platform]. What we will see is a proliferation of many different blockchain-based solutions that solve a particular need within the market and are all interoperable," Scaramanga said.
In December 2021, Minexx used blockchain to export gold from Burkina Faso in West Africa, which Scaramanga described as "an important step" to improving the supply chain in the region.
Do miners need government help?
To do so, it partnered with major stakeholders, including regulators, and explained it would be too complicated to launch any blockchain platform for minerals without state help.
This is especially true in areas with high deposits, such as West and Central Africa, where artisanal miners are plentiful and "vital for the energy transition."
According to Scaramanga, blockchain traceability, even at a national level, could improve artisanal miners' access to investment. ESG compliance would improve yet further as they are able to acquire new equipment and work safer.
"You will have a lot of these artisanal miners and small-scale sites that are not large enough because they can't get access to capital or banks, they have nowhere to go for equipment, etc," Scaramanga explained.
Meeting ESG demands hinges on regional transparency, but existing national regulation and compliance is an obstacle, according to Scaramanga.
"When you look at how the industry will be industrialised, a blockchain platform that can improve transparency and trust can help manage the ESG compliance and improve access to markets," Scaramanga explained.
Konnanath agreed that governments mineral-rich countries are "under increasing pressure" to prove their ethical mining practices and "gain trust and legitimacy" from the global mining community - and that blockchain could help them if obstacles could be overcome with government assistance.
Vjeran Ortynski, chief business development officer at CargoX, a blockchain technology provider based in Slovenia, said government intervention had meant more significant deployment across multiple industries, which wouldn't have been possible otherwise. If left to private stakeholders, he claimed it wouldn't be so.
"If it is up to businesses, then there would be zero change," Ortynski said.
"These [governments] make the rules and can change them. They can introduce the change we need to make blockchain work. The solution is here already, and it can be adopted very easily."
According to Ortynski, governments are more interested in blockchain than they were two years ago, a view shared by WAVE BL, an Israel-based blockchain solution provider.
"We have certainly seen a shift in legal perspectives countries - especially G7 governments - have had in applying blockchain technologies into global trade policies and the general openness to blockchain solutions in the trade markets," WAVE BL told Mining Magazine.
"There is no doubt that blockchain is catching fire in all areas of innovative solutions, the mineral supply chain being one of them."
New standards
However, despite government enthusiasm, a single blockchain platform that mining and supply chain stakeholders in multiple countries can access and track minerals from pit to port remains a distant prospect, and miners should focus on individual platforms with end-users and regional partners.
Douglas Johnson-Poensgen, chief executive officer and co-founder of blockchain technology provider Circulor, said it is unlikely the supply chain would launch a single industry-wide platform because "certain blockchain solutions may not provide the insights they [stakeholders] need to maximise their business operations."
Stakeholders in the mining industry, according to Johnson-Poensgen, are looking for new technologies to "help solve their customers' problems" and provide "irrefutable, real-time data in their supply chains."
To fully utilise blockchain platforms, industry stakeholders need governments to "create standards and set clear expectations" in supply chain traceability.
As part of this, Johnson-Poesngen said industry leaders should be "increasingly proactive" and look to build "strong relationships with downstream customers", such as automotive companies and original equipment manufacturers (OEMs) in the shape of direct sourcing agreements.
An example is the agreement between Renault Group and Terrafame, a Finnish producer of EV battery chemicals, who in October 2021 signed a memorandum of understanding for a future supply of nickel sulphate.
Joni Lukkaroinen, chief executive officer of Terrafame, said the mining and minerals supply chain lacks internally accepted standards.
"The supply chain for chemicals is long, and to know it is done in a sustainable manner such as where the raw materials are coming from, you need traceability," Lukkaroinen said.
"In this business, we don't have a sustainability system which is accepted and understood in different continents. From a customer's perspective, it is critical to know that the supply chain is traceable and that the original mining has been done sustainably."
The popularity of EVs means the demand for nickel sulphate alone has increased by almost 100% since 2019, Lukkaroinen observed, which means traceability will become a necessity in the coming years.
Johnson-Poesngen said the trend of direct sourcing agreements between automotive companies and mining operators is "likely to continue and grow."
Consequently, traceability will become increasingly important as the auto companies "can have confidence" in their materials and can pass along the assurance to their "increasingly environmentally conscious customers."
