How Blockchain Could Streamline the Mining Sector

Cobalt, a rare metal used to transport heat in lithium-ion batteries in devices ranging from smartphones to electric vehicles, is in high demand worldwide. 18 to 20 pounds of cobalt are typically found in an EV battery.

The supply chain for minerals like cobalt, however, is convoluted and ineffective, particularly in the mining and metals sector, where many operational and commercial procedures are still expensive and outmoded. The sector loses millions of dollars annually due to antiquated, paper-based procedures, and lack of data transparency can encourage fraud, create unhealthy working conditions, and thwart regulatory efforts.

IBM has unveiled two blockchain-enabled projects designed specifically for the mining sector to address these issues.

The first is an alliance formed by Ford Motor Company, LG Chem, and other partners on a blockchain network with the goal of increasing traceability and provenance transparency for minerals. Cobalt is difficult to track down because, although coming mostly from the Democratic Republic of the Congo, the metal travels via numerous organizations and nations before it is used by manufacturers.

The second is a partnership with MineHub Technologies, a business building an online platform with blockchain technology to assist in reducing paper documentation and manual processes in the mining and metals industry, from the mine to the end consumer. Greater transparency and cooperation in the mining supply chain as a result should result in cost savings, enhanced security, and accelerated downstream movement of minerals. The initial use case, which is presently being developed on the MineHub platform, controls the ore’s journey to the market from Mexico’s Penasquito Mine, owned by GoldCorp.

We spoke with Manish Chawla, General Manager, Global Industrial Products at IBM, who assists in bringing digital transformation to industrial and resource industries all across the world, to learn more about these initiatives.

What do you think are the main inefficiencies in the supply chain for traditional mining

When it comes to traceability of minerals and ores, rights management, regulatory compliance, or trade financing, there are still a lot of manual processes and complexity along the supply chain for minerals and metals. After ore is removed from the mine, it is transferred between a number of parties, including banks and smelters, and each of these parties is required to check a sizable amount of paper papers. Because there isn’t visibility and data transparency, this inefficiency alone can cost the mining business a lot of money and present numerous potential for fraud.

The fact that cobalt is not always found in the most friendly conditions adds another dimension to this. Tracking the origin of a certain mineral is necessary to ensure that it is mined sustainably and ethically, but doing so has proven to be quite challenging using paper-based techniques.

Do you think the trade part of the business is similarly out-of-date?

Absolutely. I’ve observed that dealing is so manual in today’s society that a buyer will actually pick up the phone and call the seller. The vendor must personally verify that the parties have ever entered into a contract. It is not mechanized or recorded electronically in any way. The middleman is absolutely necessary for the procedure. With the MineHub Platform, we’re introducing smart contracts that automate the majority of these tedious procedures, eliminating intermediaries while also enabling you to sell more minerals much more quickly. By drastically shortening the time it takes for minerals and metals to get from point a to point b, reducing the chance of fraud in commodities trade, and increasing finance in the mining industry, I believe that by itself will produce a lot of value for everyone in the supply chain.

What is the procedure for onboarding new users into this network

First, as a best practice we learned from TradeLens and IBM Food Trust, two other sizable blockchain networks covering entire industries, we’re introducing a straightforward option to join. We make it incredibly simple for members to upload pertinent information once they’ve opted in using mobile apps and a variety of APIs. We also need to connect hundreds of thousands of artisanal miners in addition to large-scale industrial miners. Many of them just don’t have the chance to go out and build out systems on their own; they aren’t even able to use a laptop to access a website.

What other ways has IBM used the mining blockchain to put its expertise from TradeLens and IBM Food Trust to use

Food safety and ethical mining are related. Understanding where something comes from and how it is handled throughout the supply chain is the main objective. It’s a similar issue to when you mix up a shipment of produce with another batch or cargo and are subsequently unable to identify its source. Another similarity is that there are both small- and large-scale producers in the mining and agriculture sectors, and we need to create a platform that can support both. Most importantly, we’ve discovered how to expand blockchain networks using an open, sector-wide standard, which is essential if you want to develop a platform that many businesses will actually use. One of the most important lessons we’ve learned from the tremendous work we’ve put into creating hundreds of blockchain networks is how to support that trust.


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