Extracting the Best Out of the Mining Industry with Blockchain
Over the past decades, productivity in the mining industry has been slipping beyond acceptable levels. Due to volatile market conditions, resource scarcity and environmental mandates, the challenges of the mining industry are far from over. In the world of deeper mining processes, rising costs, social & geopolitical governance issues, and infrastructural shortages, mining industries remain under tremendous pressure to improve efficiency and safety performance.
The mining industry is a huge market with major developed countries such as China and The United States as its main players. Here’s the data showing the participation of major countries in this industry:
Since the early 2000s, there is no shortage in the instruments and initiatives to track the performance of the mining industry, but the potholes in the industry continue to grow. Although we agree that there are no easy solutions, it is becoming quite imperative that innovative technologies such as Blockchain would play an important role in designing the mine of the future.
Does the Mining industry need Blockchain?
Although we are talking about Blockchain’s adoption and implementation in the mining industry, we also have to figure out the challenges and drawbacks that solidify the need to change the traditional systems in this industry. To understand the need for Blockchain in the mining sector, we have to look at the underlying challenges in the mining industry.
To implement a new technology effectively in this industry, the creation and exploitation of the demand is very important. After going through the key features and ways of operation of traditional databases and technologies being used in the mining industry, one can easily identify the flaws and a dire need for the implementation of better technologies such as Blockchain. Here are a few of them:
Here’s a flowchart depicting the traditional supply chain for the mining industry particularly the steel industry:
From the above flowchart, we can easily spot the absence of a central monitoring system, which is one of the main drawbacks of traditional databases and technologies in the mining industry.
Blockchain in mining industry | Debut Infotech
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The below-mentioned challenges faced by the mining industry would further clear your understanding regarding the requirement of a digital ledger in this sector.
1. Data Availability and Accuracy: In traditional databases, the data can be altered by a client, user, or any other stakeholder involved in the network. This reduces the authenticity of the data and can sometimes even lead to major data losses. High transactional costs associated with the validation of this unauthenticated data pose difficulties in the mining industry.
2. Keeping up with the new technologies: The traditional databases being deployed in the mining industry are outdated and require complete modifications to adapt to new technologies being introduced. From IoT to AI and Blockchain, these traditional methods and databases in the mining industry are incompatible with these current technologies.
3. Alignment of the data systems: Relevant factors of the mining industry share data in different formats that lead to critical compatibility issues in the mining supply chains. The databases and formats are even difficult to compile with upgraded systems and technologies such as Blockchain.
4. Compliance issues: The mining companies need to manage the approvals of the paperwork of the exploration, resource/reserve estimations, mining designs, and planning. With traditional systems, the compliance process can even take several weeks to months, leading to delay in transactions and other processes.
5. Cyberattacks: According to Softpedia, between 2010 and 2016, 22 mining companies reported major cyber attacks. Cyber attacks pose a great danger to the organization’s data and also effects its integrity. After such grave encounters, it becomes harder to ignore the fact that Blockchain provides a way out.
Although we have only mentioned some of the most highlighted challenges faced by the mining industry, the need for better technology and system can be easily inferred.
Blockchain in Mining: Sliding productivity and mitigating risks
In the above section, we saw that in traditional databases all the actors in the mining industry operated without a central viable ecosystem, resulting in compliance, data availability, and authenticity issues. With a proper Blockchain ecosystem in place, the operation of a mining supply chain management system can be expected as follows:
We hope that the above two flowcharts would have helped you to understand the difference between the traditional vs. Blockchain enhanced mining ecosystem.
Blockchain’s adoption in the mining industry is being treated as a panacea in facing major challenges in this industry. Barrick, the world’s №1 gold producer, has committed to invest $75 million this year in digital systems that aim to reduce operating costs and increase productivity.
Want to know more about the Blockchain’s application in the mining industry? Find your answers here:
Blockchain in mining industry | Debut Infotech
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After understanding the need, challenges, and applications of Blockchain technology in the mining industry, it becomes important to look at how industries are responding to the need of Blockchain in their mining industry operations.
Use-Case 1: Tracing the provenance of diamond supply chain
Mineral supply chains are complex and host several stakeholders which makes them extremely complex, and fragmented. Due to this discreteness of the supply chains, the diamond industry is facing a lack of transparency and authenticity in their supply chains. Tracking an entire shipment of the diamond from extraction to retail is very difficult.
Taking into consideration the above challenges, a Hyperledger based tracking solution was devised to digitize the database systems and build a tamper-proof supply chain. The diamonds were traced right from their extraction site, and the complete information regarding their shipment, polishing, and retail was made available with complete authenticity. This solution improved track and trace capabilities, scalability and provided real-time visibility and inventory optimization of the diamond supply chain.
Use-Case 2: Truck dispatching system based on Blockchain
The major part of the mining industry is transportation and logistics. These days miners use trucks enabled with a Global Positioning System (GPS) system for their dispatch and real-time tracking. Despite the many advantages offered by the GPS, there are many fall-backs as well. GPS signals can sometimes be blocked, due to the deepening of mines, the advent of obstacles between satellites and receivers, and many other reasons. These limitations can affect the data that is being sent from GPS to satellites.
To overcome these challenges, Blockchain-based GPS systems are being introduced in the truck dispatching systems. Blockchain technology works with both internet and local area network connections that ensure that receiving and recording of the data is done properly. The advantages offered by Blockchain in this system represent it as one of the most transparent, immutable, and secure ways of dealing with data in the mining industry. Blockchain technology is based on the P2P transaction modules and hence allows the nodes to send and receive assets between each other. Multichain software is used in this use-case to create an open-source software Blockchain platform.
Use-Case 3: Automating the Cobalt supply chain
At the heart of this use-case is Cobalt. Cobalt was earlier regarded as a by-product of the copper mining process, but in recent years the demand for the same has grown many times due to its important role in lithium-ion batteries. From powering smart devices to driving the automotive industry, batteries play an important role in our daily lives. Hence, we have the responsibility to ensure that the cobalt is ethically sourced.
In the new responsible-sourcing pilot project devised by IBM, Ford, LG Chem, Huayou Cobalt and RCS Global, major stages of the Cobalt supply chain would be traced from mine to DRC. In this Blockchain application, the real-world human auditing process would not be fully replaced but the data collected would be made more transparent and traceable with Blockchain. The new system developed would enable custody of systems that would be developed in ways to optimize the responsible sourcing field.
These were a few practical real-life use cases of Blockchain in the mining industry. Yes, we can’t predict the future, but the benefits provided by the application of Blockchain in the mining industry presents a brighter future for the latter.
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