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Blockchain helps trace responsibly produced raw materials

Despite industry efforts, “conflict resources” can still make their way into products. A little over a decade ago, I co-published a Financial Times article that served as an industries wake-up call about this problem. The article highlighted findings from a study I’d done in the Democratic Republic of Congo, where their war was funded by the natural resources they sold to Western companies, mainly in the automotive and electronics industries.

This story proved, for the first time, that we could trace those resources through the supply chain, from mine to end product. The industry response to this story was overwhelming. Companies saw that it was possible to get this information; and they knew that they needed to tackle the problem of how to keep these resources out of their supply chain.

We founded RCS Global soon after. We’re now the global leader in data-driven responsible sourcing. We use data to validate responsible natural resource extraction practices in supply chains — natural resources like cobalt that are ultimately transformed into products that we use as consumers every day. We work with companies at every stage of the supply chain to meet market and stakeholder expectations for responsible sourcing.

Blockchain technology creates a trusted network of trading partners

For the past 10 years, RCS Global has built up trust in these supply chains at every tier. We have access to manufacturing units, refineries, smelters and mine sites, to audit and monitor. We apply standards set by international governmental organizations like the Organization for Economic Cooperation and Development (OECD), which are now recognized by industries as the universally accepted standards for the validation of responsible practices.

Most recently, RCS Global teamed up with IBM to create the Responsible Sourcing Blockchain Network. We use the IBM Blockchain Platform as the foundation for a network of validated companies that can trade and exchange information directly with each other on blockchain. These are companies that have been audited and found compliant with responsible practices. Blockchain provides a trusted and secure environment that leads to greater efficiency and reduces audit costs that companies would otherwise have to carry themselves.

Blockchain as a game-changer in artisanal mining

Using blockchain to validate responsible sourcing is a game-changer. This is particularly true in the artisanal and small-scale mining sector. This largely informal sector complements industrial mining. It’s generally done by people in developing countries, typically with very rudimentary tools, and very often in extremely harsh working conditions. With blockchain, small companies that adhere to international standards can be validated and trusted, which takes the burden of compliance auditing off their trading partners. Blockchain also helps these compliant artisanal mining companies expand their trading network without the usual cost of doing so.

Using blockchain also creates opportunities for improvement in the sector as a whole. When we use an asset-backed token model, we can create and redistribute value along the supply chain. By redistributing value further upstream, we can make a portion of the value of the material that is traded on blockchain available for improvement funds that finance enhancements, not just in mining conditions, but that also address the challenges that require more systemic change.

A smarter mining and minerals supply chain for the future

At RCS Global, building smarter supply chains through technology means greater transparency and greater accountability, building and scaling trust and the ability to generate significant impact and tangible change in parts of the supply chain where many companies never thought it was possible. We are constantly incorporating the lessons from our work with IBM Blockchain technology. Our next evolutionary step will be to look at how we can effectively incorporate AI into our processes, specifically at the potential value it can add in the context of more informal economies.

Watch Dr. Nicholas Garrett discuss how IBM Blockchain enables RCS Global to help the mining industry trace natural resources through the supply chain.

From time to time, we invite industry thought leaders, academic experts and partners, to share their opinions and insights on current trends in blockchain to the Blockchain Pulse blog. While the opinions in these blog posts are their own, and do not necessarily reflect the views of IBM, this blog strives to welcome all points of view to the conversation.

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