Commodities companies have tried to save money over the past few years by using blockchain to digitize a market that still uses millions of paper records, but has faced obstacles.
According to Reuters, Mining company BHP group and steel producer China Baowu steel group has completed their first iron ore trade on MineHub Technologies Inc’s blockchain based platform. The platform, which was launched in October 2019, aims to improve efficiency in trading operations and in environmental and social governance (ESG) compliance in the mining and metals supply chains.
The trial transaction was completed on the blockchain-based platform developed by MineHub, a digital supply chain company based in Canada, with the iron ore delivered in June and the post trade processes including executing contract terms, payment notifications, digital document exchange and real-time cargo visibility (quantity, quality and location).
“The bulk commodity industry needs a digital revolution to reduce physical documentation processes,” said BHP sales and marketing officer Michiel Hovers. Reuters reported that BHP and technology firm MineHub said in separate statements that blockchain – a digital ledger that forms the backbone of many cryptocurrencies such as bitcoin – would boost efficiency and transparency. They did not say whether BHP has used blockchain before for other uses.
The MineHub platform is a decentralized digital system with underlying blockchain technology that connects buyers, sellers and service providers in mining and metals supply chains through shared information. The application enables the parties to digitally combine their trade operations processes such as procurement , distribution, requirements and financing services in a mineral transaction.
“Current pandemic events and fraud cases in the commodity trading industry are causing a step-change in the adoption of digital solutions,” said MineHub Chief Executive Arnoud Star Busmann, previously a commodities executive at ING Bank.
BHP is an Anglo-Australian multinational mining, metals and petroleum dual-listed public company headquartered in Melbourne, Victoria, Australia and Baowu steel is a state-owned iron and steel company headquartered in the Baosteel Tower in Pudong, Shanghai, China.