The recent announcement that the Global Mining Standards and Guidelines (GMSG) will establish a new Working Group on Chain of Custody that will “explore how Blockchain technology enhances traceability of industry commodities” got me thinking. How does Blockchain apply to mining, and more to the point, what are the implications for mining operations?
The first distributed Blockchain was implemented in 2009 as a core component of bitcoin where it served as the public ledger for all transactions. The invention of Blockchain for bitcoin made it the first digital currency to solve the problem of double spending without the need for a central trusted authority or server. Its use in bitcoin has led to it being used in other applications today, including the recording of events and medical records, as well as other records-management activities like identity management and transaction processing. If you want some additional primers on Blockchain you can find them here at Forbes magazine and the accounting firm Grant Thornton.
Schneider Electric is involved in several Blockchain-based initiatives from sustainability data to equipment supply chains to renewable energy, and all of these are applicable to mining or any other industry.
The GMSG initiative however calls out multiple use cases. Apart from the central chain of custody, three cases in particular stand out for me as an operations person (as opposed to a commercial/ sales/ marketing perspective). They are (quoting from the GMSG):
1. Automation of ore acquisition and transfer
Mining companies often acquire ore from third parties to blend with their own ore. Blockchain can allow the automation of ore acquisition and transfer between ore suppliers and the main company, and between major ore producers and traders.
2. Visibility of ore inventory at ports
Ports receive ore from several different sources and owners. Blockchain can be used to declare and provide visibility for all the reception of ore. As soon as the train is discharged in the car dumpers, or trucks are unloaded, the total amount of ore received is credited to the sender, the ore location and inventory in the yard is shown in real time, and outbound operations are registered for every ship’s loading operations. The ore owners will always have accountability over their port operations.
3. Reconcile amount produced and sent to processing plants
Mining companies often find it difficult to reconcile the amount produced in the mines and transferred to the processing plants. When coupled with precise measurement processes and technologies, Blockchain can automate and enforce this reconciliation such that each value is registered in the ledger book automatically.
These physical problems are typical in mining operations and are by no means “solved” in 100% of cases. As an “operations guy” I worry about many plants using Blockchain to quickly and efficiently track and distribute WRONG information caused by underlying issues that have not been solved in the first place. The phrase from above, “When coupled with precise measurement processes and technologies” is the key because many mining operations use only approximations and estimations for various data.
So if you are thinking about problems like these and wondering if Blockchain is the answer, I suggest you first check out Ampla. Implementing this solution across your supply chain will allow you to accurately track ore from extraction to processing and all the way through the entire supply chain. Once you have that capability, then and only then does Blockchain truly makes sense.