Blockchain Coalition for Ethically Sourced Minerals

Blockchain

Blockchain will now be used in an extremely different industry, from what it is being used now. A coalition of global brands has decided to take up Blockchain to ensure that minerals will be ethically sourced.

The companies involved here are Ford Motor, Huayou Cobalt, LG Chem, and RCS Global, led by IBM.

There have always been reports of mining industry using unethical means for production, processes that violate human rights, and sometimes seven fuel wars. The objective of this coalition is to ensure that these unethical practices are curtailed and the goal is to create an open, industry-wide network to trace and validate minerals and other materials for the automotive and consumer electronics industries. Blockchain offers transparency and security of the decentralized ledger known which can be used to verify the uniqueness of an item. It will be used here for tracking mineral shipments from mine through the distribution channel to the ultimate buyer of the mineral, for products like diamonds, lithium or any other mineral. This coalition’s first project will be for responsible sourcing of industrially mined cobalt, in high demand for its use in lithium-ion batteries which power a wide range of products such as laptops, mobile devices, and electric vehicles. This demand is expected to grow rapidly, as per a study by Morgan Stanley. The report says that the demand for cobalt is expected to multiply eightfold by 2026, especially for use in electric vehicles and consumer devices.

The coalition leader, IBM has invested heavily in Blockchain, and this is not the first time IBM has done projects using this technology for driving efficiencies in other industries as well.  It has worked with Maersk to reduce shipping costs, Seagate to reduce counterfeiting of hard drives, and Humanity.co to protect privacy. In the mining industry, IBM is working with Kutcho Copper spin-out MineHub Technologies, leveraging Blockchain to improve operational efficiencies, logistics, financing, and cost reduction. Other brands that work with IBM Blockchain Platform include Goldcorp, ING, Kutcho Copper, Ocean Partners USA, and Wheaton Precious Metals.

The pilot for the Blockchain project has already been launched. It is based on simulated sourcing   of cobalt produced at Huayou’s industrial mine site in the Democratic Republic of Congo (DRC). The new process will trace the supply chain as it travels from mine and smelter to LG Chem’s cathode plant and battery plant in South Korea, and finally into a Ford plant in the United States. The monitoring will be done on an immutable audit trail that will be created on the Blockchain. The participants in the network will be validated against responsible sourcing standards developed by the Organization for Economic Cooperation and Development (OECD).

The solution is built on the IBM Blockchain Platform and powered by the Linux Foundation’s Hyperledger Fabric, and the platform is designed to be adopted in the supply chains of the automotive, electronics, aerospace, and defense industries.

The initial focus of the initiative is on large-scale miners (LSMs), but over time the group wants to increase transparency in artisanal and small-scale mining (ASMs). The network can help enable ASM operators to partner with due-diligence data providers and they can ultimately, join a Blockchain-based network of validated participants. This will enable these smaller operators to sell their raw materials in the global market with the assurance of internationally ratified responsibility requirements. The pilot will also explore the use of incentives or financial benefits for ASMs and their local communities impacted by mining.