Blockchain for supply chain management is one of the most practical business applications for large sectors, as many parties seek trust and transparency in their daily operations. As such, the mining and metals sector is now beginning to use blockchain technology to effectively track carbon emissions in complex global supply chains.
The World Economic Forum this month launched a pilot program to track carbon emissions in the supply chains of seven mining and mineral companies. This initiative, known as the Blockchain Mining and Minerals Initiative, or MMBI, is the result of a collaboration between the WEF and industrial companies including Anglo American, Antofagasta Minerals, Eurasian Resources Group, Glencore, and Klöckner & Co. And Minsur and Tata Steel.
The distributed nature of blockchain technology makes it ideal for companies in the sector looking to track their carbon footprint, Jürgen Sandstrom, WEF’s Head of Mining and Minerals, told Cointelegraph:
“Future-looking organizations in the mining and metals industry are beginning to understand the disruptive potential of the blockchain to address bottlenecks while recognizing the need for industry collaboration around the blockchain.”
According to Sandström, many of the blockchain projects designed to support responsible procurement were two-sided, resulting in the collapse of the system. However, this new WEF initiative was launched entirely by the mining and mineral industry and aims to show the full potential of the blockchain to track carbon emissions throughout the value chain.
Sandstrom said the current experimental concept, while ambitious, focuses on tracking carbon emissions in the copper value chain. He also explained that a private blockchain network run by Dutch blockchain company Kryha is being used to track greenhouse gas emissions from the mine to the smelter to the original equipment manufacturer. Sandstrom stated that the platform’s vision is to create a carbon footprint for all major minerals and demonstrate the transition from mine to market and back again through recycling.
In comparison, according to a recent report by McKinsey & Company, mining currently accounts for 4% to 7% of global greenhouse gas emissions. The document states that CO2 emissions for Sector 1 and 2 (those from mining and electricity consumption) are 1%, while volatile methane emissions from coal mining are estimated at 3-6%. In addition, 28% of global emissions are volume 3 or indirect emissions, including coal combustion.
Unfortunately, the mining industry has been slow to meet emission reduction targets. The document notes that current targets published by mining companies range from 0% to 30% by 2030, which is well below the targets of the Paris Agreement. In addition, the new Coronavirus (COVID-19) crisis has exacerbated the sector’s reluctance to change. A blog post from Big Four Ernest & Young reveals that decarbonization and the environmental agenda will be one of the biggest business opportunities for mining and mineral companies in 2021 as they have become major issues since the pandemic. Sandstrom added:
“The industry must respond to the increasing demand for minerals and materials, while responding to the increasing demands of consumers, shareholders and regulators to achieve greater sustainability and product traceability.”
While it is evident that the mining and metals industry must reduce carbon emissions to meet sustainability criteria and other goals, blockchain is undoubtedly a solution that can provide exactly that when compared to other technologies.
The concept is detailed in NS Energy, written by Joan Colell, Head of Business Strategy and Chief Commercial Officer at FlexiDAO, an energy technology software provider. He explained that the supply chains for volumes 1, 2 and 3 must be measured precisely, which requires a high level of integration and coordination between the multiple supply chain networks. he added:
“Different organizations have to share the data they need to validate sustainability products and ensure traceability. This is an important step because anything that can be measured is no longer a risk but a management problem.”
According to Coleil, data exchange has two main goals: transparency and traceability. Meanwhile, the main function of the blockchain network is to provide transparency and traceability to many participants.