Blockchain Enhances Transparency & Traceability in Mining Supply Chain

#Blockchain #Energy #Mining #SCM

Abhinav Sengupta

Abhinav Sengupta, a MBA in Energy & Infrastructure with B.Tech in Mining has a decade of work experience in Mining, Energy & Infrastructure Sector and has acquired strong industry exposure in areas of Transaction Advisory (Strategic/Risk/PPP), Business Valuation, Digitization / IT Integration, Techno-Economic Studies, and Strategic procurement. He is currently working with one of the Big 4 consulting firms.

The Mining Industry locates minerals and removes them in the most economical and efficient way possible for use by various industries, such as energy production and construction. The path of several minerals across the supply chain is complex and inefficient, especially in the mining and metals industry, where many operational and commercial practices remain costly and antiquated. Outdated, paper-based processes cost the industry millions of dollars each year, while a lack of data transparency can invite fraud, unsafe working conditions and confounds regulation efforts.

Blockchain has been digitally transforming various enterprises in most industries. Its encryption technology and digital ledger allows secure storing and sharing of cryptocurrency. Blockchain provides security and transparency in business transactions, changes made to designs, documents and other business agreements. These aspects of Blockchain make it useful and relevant to the mining industry.

Blockchain Technology is one type of distributed ledger technology; it is a time-stamped series of immutable record of data, managed by a cluster of computers not owned by a single entity.” Blockchain digitally sends information from a starting point to an end point in an automated, safe manner with negligible transaction costs.

Supply chain traceability of minerals

  • ✔ Blockchain will track the mineral / ore at each stage of this supply chain, from when it is mined to when it is beneficiated to when it is put in smelters and when & where the finish product is put to final use
  • ✔ Blockchain can also be used to develop comprehensive end-to-end tracking of ores and minerals
  • ✔ The process would require sealed bags or containers of concentrates and ore to be stamped with a unique identifying ID that will subsequently be logged on the blockchain
  • ✔ The ID will contain information on the quality and quantity of each parcel of ore or concentrate, as well as being continually updated with an ongoing timeline tracking and logging movements
  • ✔ This will bring in compliance, transparency and accountability in the entire process

Sustainability in mining operation

  • ✔ Spare part traceability for limiting the equipment downtime. Regularity of servicing, registration of faults, scheduled overhaul
  • ✔ With blockchain immutable database that shows full, time-stamped life of a piece of equipment, signed off by network participants makes the auditing process and liability straight forward and irrefutable
  • ✔ Contract management like maintenance contract, equipment contract, labour contract. Blockchain technology automates the contractual executions to keep the process on track and objections to minimum, and improves the trust between the stakeholders
  • ✔ Blockchain can be a secure platform for M&A due-diligence procedure and regulatory auditing compliances. It could also be used to track high-value samples from exploration activity, or monitor samples to potentially ensure market-sensitive results are not manipulative