Introducing IotaOrigin
One of the greatest challenges facing society and the economy is global warming. Global warming has by far the greatest influence on our current thoughts and actions as well as our future coexistence. The renouncement of fossil energy sources and the sustainable management of our resources play an important role in this context. It should be pointed out that for the energy turnaround, we must also achieve a resource turnaround. A resource turnaround is a challenge in itself and can lead to distortions in the access, distribution and use of resources. This can raise new social, political and economic issues.
In the following articles, we introduce IotaOrigin and explain how we intend to implement DLT to achieve a responsible resource and energy transition while creating value for the economy and society by raising the potential of small-scale mining.
I — Status Quo
To combat climate change, the UNO has agreed to implement the Paris Climate Agreement, which aims to keep global warming below 2°C. In order to meet this target, emissions that are harmful to the climate must be reduced. This is only possible if the use of fossil fuels, which are responsible for 73.2% of greenhouse gases, is abandoned (Fig. 1).
Figure 1 : Global greenhouse gas emissions by sector (ClimateWatch, the World Resource Institute 2020)
The initiated energy turnaround can only be achieved by a corresponding resource turnaround. The material intensity of renewable energies per terawatt hour is between 200–300 % higher than a terawatt hour generated by fossil fuel, while the emission intensity is significantly lower. Emission intensity from renewable energy is lower even when the production of the raw materials is included (Fig. 2). The World Bank expects demand for numerous raw materials to increase by up to 500% as a result of the energy transition. (World Bank 2022)
Figure 2: Material and emission intensity for power generation and road transport (McKinsey & Company 2022)
II — Outlook
The needed pace for realisation of the energy turnaround is creating challenges on the supply side of raw material production. This cannot be offset by industrial mining in the short term. Prospection, exploration and the development of the mining infrastructure can take up to a decade or more (Fig. 3).
Figure 3: Global Metals & Mining conference Bank of America (Anglo American 2022)
Every three years, the European Commission draws up a list of critical raw materials (Fig. 4). The number of raw materials mentioned in this list have increased from 14, when it was first compiled in 2011, to 30 in 2020. The European Commission defines critical raw materials according to their importance for the economy, the supply situation as well as reliable access.
Figure 4: List of critical raw materials (EU Commission 2020)
The future supply situation continues to be influenced by external factors:
• Automation and digitalization in production lead to the reshoring of production sites from emerging countries to industrialised countries. This trend supports the dismantling of international just-in-time supply chains and has deglobalizing forces. The reduction of supply chains lead to an increased demand for primary raw materials in industrialised countries and will endanger the already fragile supply. (S&P Global Market Intelligence, Peter Brennan 2022)
• Political deglobalization is increasingly becoming a threat. The dependencies in supply chains are leading to questions about security, access to raw materials and key technologies. (Intereconomics, Alicia García-Herrero 2022)
• Covid19 is one of the catalysts of the above trends. Lockdowns and disrupted supply chains lead to a surge in automation and sharpen the focus on systemically important sectors. (McKinsey & Company 2021)
Consequently, the focus of international competition is shifting from pure labour cost to the geographic location and political stability of countries as well as its access to strategically important raw materials. This will enable resilient automated production in the long term.
The EU in particular will suffer difficulties in this scenario due to its high dependence on imported raw materials and the lack of own geological deposits (Fig 5, Fig 6).
Figure 5: Import reliance for selected non-ferrous metal ores in the European Union (EU) as of 2018 (statista 2020)
Figure 6: Who owns the Earth? The scramble for minerals turns critical (THE TIMES 2022)
III — Follow up
The resource turnaround will be one of the most important issues of this decade. IotaOrigin’s goal is to increase security of supply by diversifying raw material procurement to meet the growing demand for raw materials by strengthening small-scale mining. This must be done in a responsible and environmentally friendly way, otherwise it would discourage the development of renewable energies that utilize many critical raw materials from small-scale-mining. IotaOrigin focuses on three pillars to realize that:
- Tracking of critical raw materials through a digital system based on distributed ledger technology (DLT) to comply with international regulations.
- Financing of small mining companies, most of which do not have access to international financial markets, in the form of ESG and impact investments that are based on the tokenization of commodities and real-world-assets (RWAs).
- Commercialize tokenized commodities and spot markets for critical raw materials by building a decentralized digital commodity bank/exchange in the Decentral Finance ecosystem (DeFi).
In the next article we will discuss the small-scale mining sector and its importance for the future supply of raw materials.
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