TriplePundit • The Blockchain Solution for the World’s Most Problematic Minerals

This article is part of our series on responsible mining solutions. The push for clean energy is fueled by a growing demand for minerals, but conventional mining has a track record of harmful social and environmental impacts. Using blockchain traceability tools could be part of the solution to that problem.

Minerals change hands many times as they move from mine to smelter to manufacturer. By the time they reach the company that makes auto parts, battery components, or solar panels, nobody really knows where the minerals came from.

Not knowing the origin wouldn’t be a problem, except that some mines operate using child labor, forced labor, environmental negligence or no legal standing. In some regions, mining minerals like tin, tantalum, tungsten and gold is also significant source of revenue for violent armed groups, resulting in what’s known as, “conflict minerals.”

While some companies might not care, most don’t want to support illegal and inhumane mining operations. But knowing with certainty that minerals don’t come from problematic mines is not so easy.

One way to prove where minerals come from is creating an authentic record of documentation for every step the minerals take from mine to manufacturer, and blockchains are emerging as an effective place to house that information.

From crypto mining to traditional mining

Based on the same system that records cryptocurrency transactions, blockchain tools can be adapted to track mineral transactions. Documents that prove origin, sales, transport, certifications and audits can all be uploaded digitally to tell the history of a mineral. Then, QR codes attached to sealed bags, boxes or shipping containers can link directly to this information.

“The main benefit is that blockchain allows you to have unchangeable data,” said Nathan Williams, CEO of Minespider, a company that provides blockchain solutions to the mining industry.

When something is uploaded to the blockchain, it remains there forever and cannot be changed. Information can be added, but every addition comes with a time stamp and record of who added that information. In this way, mineral transactions become completely transparent as they move downstream from the mine.

Knowing where minerals originated and how they changed hands along their journey is important, but that alone does not tell you about conditions at the mines. If mines are certified and audited for responsible management and humane labor practices, documents verifying that can be uploaded to the blockchain, providing assurance that minerals were sourced responsibly and due diligence requirements were met.

Given that some raw minerals come from exploitative origins, the Organization for Economic Co-operation and Development (OECD) created due diligence guidance to help companies ensure their supply chains are not engaged in abusive practices. The European Union put corporate due diligence requirements into law through the Corporate Sustainability Due Diligence Directive, with mandatory reporting expected to start in 2027. And the United States and the EU both have conflict mineral regulations.

The Rwandan tin smelter running on blockchain

Tin is one of the major conflict minerals along with tungsten, tantalum and gold. To assure buyers that its tin is conflict-free, one Rwandan smelter implemented a series of solutions, one of which involves blockchain traceability tools.

“Tin is classified as a conflict mineral, so we need to have all our traceability protocols in place,” said Aleksandra Cholewa, director of investment and development at Luma Holding, the company that owns the Rwandan tin smelter.

It started with becoming the first African tin smelter certified by the Responsible Minerals Assurance Process, which is the gold standard due diligence check for smelters around the world. The process certifies that smelters are responsibly managed and perform due diligence on their supply chains that meets the requirements of the OECD guidance as well as regulations in Europe and the U.S.

Luma wanted to go one step further, however, and track exactly which minerals came from which mine.

“We have about 30 different suppliers in Rwanda. We managed to implement blockchain traceability at every one of those mine sites,” Cholewa said. “We started issuing digital product passports for each shipment of tin in December 2020. And because of that, we also managed to get new offtake clients, those who were previously very hesitant to touch anything coming from this region.”

The process is different at each mine site, but imagine a small-scale mine where workers fill bags by hand with tin ore. Once filled, the bags are gathered for transportation. Bags are numbered, weighed and sealed before being placed on the truck. All of this information is documented with photos, written records and logs, then uploaded to the blockchain with a time stamp and record of who added the information.

Using a QR code or some other form of digital access, when the shipment of minerals arrives at its destination, new documentation that confirms its arrival can be added to the blockchain. This process can continue as many times as needed, providing a robust digital product passport.

“It’s a great way for our customers to be able to prove to their authorities or their customers where the product is originating from, and what kind of journey it went through,” Cholewa said.

Katie Redmond, technical director of audits and mapping at sustainability-focused SLR Consulting, echoes the buyer confidence effect of blockchain. “Digital traceability tools can be helpful to map out the supply chains based on supplier-to-supplier connections and give companies confidence that they have conducted the required due diligence on their sub-suppliers,” she told TriplePundit in an email.

Blockchain tools can be applied to large-scale mines or artisanal and small-scale mining. But one challenge with artisanal mines is that the informality of the sector can make it difficult to secure the right documents and pay for the blockchain solution to be implemented, Minespider’s Williams said.

One tool of many in the due diligence toolkit

An additional challenge of working with blockchain tools is that they are often proprietary, meaning that combining two different minerals from two different blockchains into one final digital product passport can be tricky.

“A risk with multiple, proprietary systems is that data definitions and formats are not comparable or consistent,” said Jennifer Peyser, executive director of the Responsible Minerals Initiative, the organization that developed the Responsible Minerals Assurance Process certification. “Suppliers can also experience significant burdens when asked to engage many different systems or software.”

Blockchain doesn’t solve all supply chain problems, but it’s one tool of many in the due diligence toolkit. Supply chain partners still need to have stringent due diligence procedures to ensure that minerals are responsibly sourced and do not get mixed with minerals of unknown origin.

“The whole idea here is that you’re looking for data that helps you avoid risk,” Williams said. “Having the technology gets you data, but it doesn’t replace due diligence. It’s supposed to make due diligence easier.”