Blockchain venture studio ConsenSys and cloud-based metal concentrates exchange Open Mineral have announced a joint venture establishing Minerac, a blockchain consortium for mineral commodities trading and connected supply chains operations. A number of mining companies and financial institutions will join as stakeholders and collaborators.
The companies state that the mining and metals industry is a critical component of the global economy, however, many operational and commercial practices remain inefficient and antiquated, leading to critical data omissions, security vulnerabilities and even corruption. These inefficiencies can be eliminated with blockchain, an immutable and cryptographically secure archive of records stored on a distributed ledger, by using smart contracts built on the Ethereum platform. Minerac will allow stakeholders to securely exchange critical trade documents, such as bills of lading and letters of credit, via the use of smart contracts.
“Commodity trading transactions involve multiple parties, located in different jurisdictions. Logistics are complex, financing is difficult to acquire and the entire process is very paper heavy. Thus, the industry is primed for blockchain disruption to simplify the trading process, increase efficiency and profitability,” says Boris Eykher, CEO Open Mineral.
Minerac stakeholders will benefit from increased compliance, transparency and ease of auditability, he says. Because the Minerac ledger will be shared, all parties involved in a transaction can be confident that all data is up-to-date, which will reduce errors and create greater overall transparency, eliminating the potential for bad actors to take advantage of loose record keeping.
Minerac is also set on addressing key sustainability and security issues by creating processes that would require sealed bags or containers to be stamped with a unique, tamper-proof, identifying ID that will be logged on the Minerac ecosystem. The ID will contain specific information related to each parcel of ore and will also be continually updated with location details and movements. This will provide clients transporting high-value minerals with increased security and will help validate that the commodity being purchased is from compliant and conflict-free regions.
Minerac will develop its own enterprise platform based on the industry standards established by the Enterprise Ethereum Alliance. It will also integrate ConsenSys’ cloud-based TMS logistics platform, a customizable solution designed to support the commodities logistics space by reducing the amount of data entry points and reconciliations during the supply chain process.
The project will be incubated out of ConsenSys Energy and Natural Resources group, a team within ConsenSys Solutions, in partnership with Open Mineral.
The Blockchain Revolution
The blockchain revolution has already arrived for shipping, with big players like Maersk making moves on core business systems that rely on distributed ledgers. It has also arrived for shipping finance with Shipowner.io saying it intends to democratize investment in merchant vessels by offering a blockchain-based trading platform.
In May, Alibaba and four Australian and New Zealand companies introduced a food-tracing system based on blockchain technology. The consortium, which includes two New Zealand-based companies dairy-exporter Fonterra and New Zealand Post, as well as Australia’s natural health company Blackmores and Australia Post, is called the Food Trust Framework.
For food producers, the use of blockchain means that any unwanted actions, such as using fake ingredients, will be detected much faster. In the event of food contamination, such as the recent romaine lettuce scandal in the U.S., retailers can quickly retrace the supply chain and remove the specific batch instead of recalling the entire shipment.
Documentation and administration are estimated to be one-fifth of the $1.8 trillion spent annually to move goods across borders. According to The World Economic Forum, by reducing barriers within the international supply chain, global trade could increase by nearly 15 percent.
According to the International Data Corporation, global spending on blockchain solutions is forecast to reach $2.1 billion in 2018, more than double the $945 million spent in 2017. In 2021 annual spending is expected to reach $9.7 billion.