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IBM has announced two separate projects aimed at tracing supply chains for the metals industry using the blocklink platform Hyperledger Fabric.
One is designed to track the cobalt traveling from a mine in the Democratic Republic of the Congo to a Ford Motor Company plant, while the other tries to monitor the transportation of metals from a mine to Mexico.
In the first project, a 1.5-tonne cobalt batch will leave the mine in the Democratic Republic of the Congo next month, will travel to be refined in China, then to a battery plant in Korea and will end up in the United States in the Ford plant as a battery for an 'electric car. The trip, lasting about five months, will be recorded on the blockchain, said IBM.
In addition to IBM and Ford, this pilot project concerns the Chinese cobalt mining company Huayou Cobalt, the energy producer LG Chem (a unit of the South Korean conglomerate LG Corp.) and the technology company RCS Global. Participants will maintain an authorized blockchain built by IBM on Fabric to record each phase of the metal path.
The goal is to ensure that at every stop in the supply chain, participants can verify that the material has been purchased according to the standards of the Organization for Economic Cooperation and Development (OECD), Director General of IBM for global industrial products Manish Chawla told CoinDesk.
The Democratic Republic of the Congo is famous for the use of child labor in cobalt mines and the industry, which supplies the raw materials used in consumer electronics and electric cars, has attracted attention of human rights groups.
"Blockchain is the most effective technology for providing real-time access to all due diligence processes, providing visibility to the supply chain from miners to the market," said Chawla. "Our role at IBM is to bring people together for this project and develop the platform."
Tie it to the ground
So, how can a blockchain exactly check if the material has been ethically extracted? As often happens with out-of-chain resources, this project will have to rely on humans to insert correct data.
Some of the humans in question are working for IBM's partner, RCS Global, who has been monitoring the practices in metal mines in Africa for several years. During its normal activity, the company sends its employees to small mining sites to search for illegal practices and physically put the barcode tags on the ore bags, recording that it has been extracted without any violation of the law, Jonathan Ellermann, a project director of RCS Global, told CoinDesk.
If a monitor detects illegal activities, such as child labor, this will be recorded in the system, the RCS headquarters receives a warning and informs the exporters working with this mine that the batch they are about to ship no longer meets international guidelines, Ellermann said. "Or sourcing moves away from this site, or prevention practices are put back in place," Ellermann said.
For example, last year, in one of the gold mines monitored by RCS, he had to inform the exporter of a violation, he said. "What happened in the end is that the exporter has moved away from that site."
However, in the pilot blockchain, there is an additional level of trust.
Since initial monitoring will take place on an industrial "mining" mining site, Ellermann said, RCS monitors will not need to be there full-time. Rather, RCS will check the information provided by the mine management, whose employees will tagging. While the barcode tags will match the resources on the distributed ledger, audit reports will be stored off-line on an IBM server.
Long-term plan
IBM started working with RCS Global last year, said Chawla. "They know how to implement supply chain audits, understand the civil mapping side of the supply chain and understand the digital side of it".
In the pilot phase, each participant will maintain his own node as a validator, he said, but with the adhesion of several companies, he will also have the possibility to have his own node supported for them by IBM.
The Hyperledger technology will allow participants to choose which information is available only to their partners and which can be seen by external parties such as NGOs, said Chawla. Regulators and government agencies should also be able to view the information recorded in the system; the rules of involvement for third parties will be elaborated during the project.
If the pilot succeeds, IBM expects other supply chain auditing firms (tracing various raw materials used for batteries, including tantalum, tin, tungsten, gold and rare earth), car manufacturers and electronics manufacturers to participate in the project, said Chawla.
This is not the first blockchain project related to cobalt mining: last month, Overstock's tZERO announced that it was working on a cobalt security token with private equity firm GSR Capital.
Beyond cobalt
In the other metal project announced Wednesday, IBM is working with a Canadian technology startup called MineHub Technologies; mining companies Goldcorp, Wheaton Precious Metals and Kutcho Copper; trading company of metals Ocean Partners USA; and ING Bank.
MineHub is planning to build a platform on the Hyperledger Fabric to track the metal concentrate from the Penasquito mine at Goldcorp in Mexico. The system would allow the mining company to load data on the mineral in which it operates, including certification that the material was produced in a sustainable and ethical manner, according to IBM.
As the materials are transported, new information can be added to the system as transactions, so regulators can verify the data, as well as the end users.
"Intelligent contracts for supply chain processes such as trade finance, streaming and royalty contracts will be used by companies like Wheaton Precious Metals and other institutions that provide credit services such as ING bank," says IBM's press release.
Image blockchain IBM from consent 2018 through CoinDesk archives.
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