concentrates market is a $50 billion global business. By digitizing
transactions and shipments, the consortium aims to reduce losses and
inefficiencies of paper tracking.
Open Mineral is a cloud-based exchange that “makes it easy
to competitively buy and sell base metal concentrates and ensure efficient
trade execution,” according to its website. The platform was launched in early
July by a group of ex-traders from Glencore, a Swiss commodity trading firm.
The metals industry needs to track large quantities of
shipments from the mine to end users such as manufacturers. In theory, that can
be done with decentralized blockchain databases, which can register
Like with most supply chains, tracking shipments can be a
paper-intensive endeavor. The goal of Minerac is to use a blockchain platform
to record transactions in a distributed database so that all parties can see
the information simultaneously. Shipments will also be given a unique
complex, financing is difficult to acquire and the entire process is very paper
heavy,” Open Mineral Chief Executive Boris Eykher told Reuters. “Thus, the industry is primed for blockchain disruption to
simplify the trading process, (and) increase efficiency and profitability.”
To some degree,
the integration of distributed ledgers in the mining and metals industries is
just a step in the natural progression of digital business, similar to that of
any other step toward decentralization.
digitalisation going on all around the world – take taxis with the Uber, take
Amazon or eBay — stock trading is now on online platforms – all of these things
become more efficient with digitalisation,” CEO Eykher told Metal Bulletin.
Open Minerals’ trading platform, one of
the key members of the consortium, is aspiring to become the eBay of metals
trading. It would “disrupt the decades-old model” for metal concentrates
markets, which have been dominated by large
global trading houses with often-opaque pricing methods.
What could make its blockchain platform useful
is that it will offer pricing transparency for metals. Producers and end users
would have access to the same information on shipments. Ultimately, smelters
and miners could enhance their returns by dealing directly in the metals market
because they wouldn’t have to deal with middlemen.
Using an online exchange, miners and
smelters would post their tenders on Open Minerals and then receive offers from
counterparties and close deals. They’d pay a fee to the platform for its use.
Performing online transactions is much
more efficient now than it was even a decade ago. A process that used to take
months now can be done in weeks. Time was wasted in moving paper documents back
and forth between suppliers, shippers and end users. It was even more
complicated in this space because ore has to be shipped from mines to smelters,
refiners and manufacturers.
Identification of minerals can now be
facilitated by blockchains and physical identification.
“Sealed bags of minerals would be stamped with tamper-proof
identification that will allow them to be traced to help ensure that they are
coming from compliant and conflict-free regions,” the Open Mineral statement
Despite its apparent economic benefits,
Open Mineral faces an uphill battle. Metals mining is a conservative industry
and one that is slow to change. And trading giants will fight to retain their
market share and profits.
The platform will initially focus on concentrates for zinc,
copper, lead, gold and silver. It currently has 100 registered members and is
planning to expand.