Blockchain-based systems may be the key to ensuring responsible sourcing for minerals.
The Dodd-Frank Act, passed in 2017, requires any US firm to ensure that mineral resources they obtained were not for the enrichment of anyone involved in armed conflict, financing warfare, or abusing human rights. The EU has a similar regulation on imported conflict minerals which will require the company to report its supply chain due diligence obligations for the sourcing of tin, tantalum, tungsten, and gold.
MineSpider, a new company out of Berlin, seeks to provide a solution by adopting the bitcoin technology Blockchain as a way to maintain the confidentiality of their supply chain while simultaneously reporting due diligence to governments. MineSpider founder and CEO Nathan Williams said, “There’s a lot of thoughts on how to keep sensitive data private.” To that end, Williams and his team built a layered blockchain system using Ethereum which Williams describes as a Russian doll.
“We have two layers – a data layer and an Ethereum layer. Ethereum is the blockchain immutable layer, and on that, we are storing a ton of material, how much in shipments and the grade,” said Williams. “Then there is a link to a packet of data. One layer of data is data you want everyone to see. Another layer is private data that needs to be registered as unchangeable, which is only available to customers. The third layer is key – we encrypt the first two layers, and then asymmetrically encrypt that with the key of your customer.” This layered approach allows companies to provide keys to their customers and regulator while maintaining the privacy of supply chain details. MineSpider’s first pilots are underway.
Another contender for blockchain mineral tracking involves cobalt. Cobalt, a by-product of the copper mining process, plays a critical stabilizing role in lithium-ion batteries. Which power just about everything these days. IBM, Ford, LG Chem, Huayou Cobalt, and RCS Global have implemented their own new responsible sourcing blockchain pilot. The near real-time visualization capabilities of the blockchain make the tracing far more transparent and faster. It does not replace human-led auditing and due diligence obligations. In fact, the data gathered during real-world human assessments serve to validate the accuracy of the blockchain.