Using blockchain to clean up the cobalt supply chain

Scarlett Evans 8 April 2019 (Last Updated December 23rd, 2019 11:10)

Capable of tracing metals from extraction to production, blockchain technology offers a novel means of keeping the supply chain sustainable. Now, it is being piloted by natural resources producer Eurasian Resources Group at its cobalt plant in the Democratic Republic of Congo. Scarlett Evans speaks to CEO Benedikt Sobotka to find out more.

Using blockchain to clean up the cobalt supply chain
An aerial shot of ERG’s Metalkol RTR cobalt and copper production facility. Credit: ERG

Scarlett Evans: Can you explain the new system being piloted by your company?

Benedikt Sobotka: Eurasian Resources Group (ERG) is piloting a blockchain-based solution built on the IBM Blockchain Platform at the Group’s Metalkol RTR operation, a hydrometallurgical plant in the Democratic Republic of Congo, with a target capacity of 24 kilotons (kt) of cobalt per annum. We are using IBM’s expertise and their Hyperledger Fabric in our minimum viable product (MVP) of a decentralised online database in the form of a distributed ledger. Blockchain will be used to record the provenance and movement of cobalt throughout the supply chain.

SE: What is the new technology hoping to improve?

BS: The modern supply chain has become increasingly complex, involving multiple stakeholders. There is a need for improved transparency across the value chain to trace metals and inform customers about their quality. For the final goods producer, be it a car manufacturer or an electronics company, it is a very complex and at times impossible task to verify the origin of cobalt and make sure it was produced, transformed and transported in a responsible way.

Left to its own devices, the supply chain itself cannot provide transparency, since business process management software is confined to a specific company, and companies will not share commercially sensitive data. This is a challenge that blockchain can help address as the process of sourcing and aggregating becomes secure and efficient and helps build trust in the brand. Hyperledger Fabric, for example, provides essential information safely encrypted to companies and restricts access to potentially sensitive data that should not be shared.

Creating trust and ensuring transparency in the global supply chain is also in line with our commitment to the World Economic Forum’s (WEF) Global Battery Alliance, of which ERG is a founding member, and I am proud to co-chair.

SE: What made you decide to turn to blockchain for a solution to these problems?

BS: Traceability is one of the tenets of our recently launched Clean Cobalt Framework at Metalkol RTR and forms part of our commitment to ensure sustainable cobalt production. We have already seen how new levels of trust and transparency are brought to complex market systems through the use of blockchain, and realised that it could support our Clean Cobalt Framework and wider efforts in assuring traceability of cobalt. We therefore identified this as a good opportunity to enhance traceability for our products and our sector because this is much wider than just ERG – the ultimate vision is to create an industry platform that will give ‘from mine to car’ traceability.

This is an important and strategic project for us, and is led by Transformation and Sustainability (Anastasia Kuskova) and Strategy (Sergey Tyan) teams reporting to the deputy CEO, in close collaboration with other key departments and sustainability advisors. We strive to be leaders in the adoption and share our progress with other industry players at multiple events: I am chairing the WEF Metals and Mining Transformation Working Group, while Anastasia Kuskova presented details of the project at the International Conference on Sustainable Development in New York last year and at the Think 2019 conference in San Francisco a few weeks ago.

SE: Do you see the technology becoming more important with the rise of EVs?

BS: The real ambition is a blockchain network, and yes, we think that our platform will become the go-to system for all battery materials. Firstly, it will simplify life for car producers’ procurement teams. They will know for certain that materials being used for their cars have been produced in a responsible way, to agreed standards and will save them millions on due diligence costs.

Secondly, it will satisfy the rising sustainability awareness of consumers. Imagine you have taken delivery of new electric car; you scan a code on the back (or in the documents that go with a car) and can see the full journey of the materials used in producing the battery.

SE: Do you think the technology could be applied to other systems?

BS: Absolutely. Blockchain is already being used in everything from financial services to flower exports, so I am confident that the system could be rolled out to include other metals which have complex supply chains.

There are two obvious business cases for blockchain: one, payments and transactions, and two, supply chain traceability. These will drive the adoption of the technology first, with fintech taking the lead as technology penetration in this field is much deeper. Payments and traceability business cases can be applied to almost any industry. If we look a few years into the future, we anticipate greater adoption by charity organisations through tokenisation. For government services and voting mechanisms, blockchain will bring enormous benefits, but it requires significant changes in the legal framework and will take a while to be widely available.