The World Economic Forum’s Mining and Metals Blockchain Initiative, set up with Anglo American, Antofagasta Minerals, Eurasian Resources Group, Glencore, Klöckner & Co, Minsur, and Tata Steel, was established in October 2019 as the first test case for collaboration between mining and metals companies.
The seven companies joined forces to design and explore blockchain solutions, boost responsible sourcing in the industry, and speed up the future adoption of supply chain visibility solutions and environmental, social, and governance (ESG) requirements.
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By GlobalDataThe initiative has recently hit an important stage of development as it released a proof of concept that blockchain, a type of distributed ledger technology, can track embedded greenhouse gas emissions.
The successful completion of the proof of concept and the evidence from the pilot project, named the Carbon Tracing Platform, will be critical to ensure traceability of emissions from “mine to final product”.
The need to account for mining and mineral emissions
Over the past few years, the traceability and transparency of certain types of minerals, such as cobalt in the Congo and gold across various locations in Africa, Asia, and South America, has been in the spotlight because of their link to provenance issues, including child labour, unfair working conditions, and low pay.
Similar scrutiny is now falling on the sector’s environmental record, demanding accountability for emissions resulting from mining and mineral operations.
“What is happening right now is that there’s this strong drumbeat to climate movement and emissions. So, you have external forces, in a way, that are putting pressure on organisations directly, but there’s also an internal need,” says Jorgen Sandstrom, head of mining and metals at The World Economic Forum.
With most organisations collecting a lot of data points on ESG and sustainable development goals, and managing all this data collection internally, there is the opportunity for blockchain technology to play a crucial role.
Enabling organisations to become more digital in this way creates a more connected value chain, a trend that has recently been further accelerated by the Covid-19 pandemic, which exposed the need for companies to improve their resilience and become much more connected.
“You could say that we have a changing landscape around the supply chains of the mining/metals industry, with an increasing pressure from financial institutions, banks, pension funds, shareholders, investors, and regulators, because policies are changing,” Sandstrom says.
He also explains that there are a few companies testing blockchain individually, but the added value to this technology comes from collaboration and working to solve business problems in a team.
“So they’ve been working together on the proof of concept; testing the technical feasibility on the selected tracing emissions through the supply chain and [exploring] how you share emissions data or how you create interoperable solutions, or how you report an audit of emissions data,” he says.
How is the distributed ledger technology tracking greenhouse gas emissions?
To create a distributed ledger technology, operators ultimately position synchronised digital data geographically across multiple sites, countries, or institutions.
In mining, they create a technology that follows the supply chain or the chain of custody from “mine to market”. For example, one starts with a smelter, then goes to the manufacturer, the transportation between manufacturers, then samples, consumer facing companies, and finally, the buyer.
In such a sequence, one creates a platform that resembles the nodes of the chain of custody, where data points are input to account for emissions in a decentralised way, which is also resistant to any alteration or censorship.
But Sandstrom shares that it’s not all fun and games, as operators have to address data transparency and data privacy, as well as creating a step-by-step approach before building the software or the digital capital.
“Before you start the coding, you have to really think through the concept. You have to think through the strategy and how you collaborate to share data.”
Another important consideration is the standardisation of the way that data is input in the system as it requires a unified approach on how the upstream asset process is digitalised.
“It’s very important that an apple is an apple to everyone. If everyone has their own opinion about what an apple is or a cable or a metre, the tool you’re building is not as valuable anymore. So, it’s absolutely important that you have an agreed language and vocabulary,” he says.
The other aspect worthy of attention when working on a blockchain consortium is governance and sufficient level of collaboration between the companies.
Sandstrom explains: “You can imagine, if you have companies from the same industry that may not be used to collaboration. They have to sit in the same room and agree on how to take decisions, so you need to make sure that you have a functioning governance.
“That also includes how to enlarge the collaboration and go from a few companies to many companies, how to create a multi stakeholder approach with players both from the public and the private sector.
What is next for the Blockchain Initiative?
The consortium has finalised its work for now and the outcome of proof of concept, the Carbon Tracing Platform, is currently being evaluated with a focus on its technological feasibility, the complexities of the supply chain dynamics, and the set requirements for future data use.
The team is looking at the opportunities to take the next natural step and possibly create a much more advanced pilot, but the consortium believes that such technology can help accelerate responsible sourcing and sustainable practices in the mining and metals ecosystem to make a real difference.
“I think there’s a tremendous opportunity for the industry to explore and collaborate together, because there’s a number of challenges out there, how to address emissions for example, where we definitely need industry collaboration,” Sandstrom says.
According to World Economic Forum blockchain project lead Nadia Hewett: “This opens exciting new possibilities that organisations otherwise would not have the capability to deliver on their own, and the opportunity allows for advanced learning from other industries.”
“That’s the true value from my perspective, because everything will move faster if you have a good critical mass of organisations working together. You have much, much less a degree of uptake and you can also share risk and innovate,” Sandstrom adds.
Such innovative blockchain-centred work is hoped to be further endorsed and rise in popularity among operators, so it could continue the digitalisation of mining and help to make for a better explored, better connected, and more accountable mineral industry.
