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23 August 2022 6 min read

Blockchain would allow transparency and certification of ESG processes from mine to metal product.

Blockchain certification of diamonds

That ability illustrates the power of blockchain, which is at the heart of an array of digital technologies Everledger uses to trace and certify the characteristics and progress of diamonds along the supply chain—from where they are mined, through processing, cutting and polishing, to the final products and buyers.

In July 2021, the Australian Government awarded a $3 million-grant to a consortium of Everledger, CSIRO Mineral Resources and Data61 together with 11 other partners, to investigate how blockchain technology could be applied to the critical minerals—such as nickel, cobalt, copper and lithium.

These minerals are used to produce the wind turbines, batteries, solar cells and many other devices we need to decarbonise the world. Australia is a significant source of them.

The grant, under the Blockchain Pilot Grants program, was to produce a prototype as a demonstration and proof-of-concept of how blockchain could be employed to track the origin and supply of nickel—an increasingly important part of batteries—from mine to metal product.

The idea was to allow transparency and certification of the environmental, social and governance (ESG) processes at each stage.

Enhancing ESG
Dr Ewan Sellers

Such ESG certification is becoming an increasingly important part of international trade in a world of blood diamonds and Fair Trade coffee, and where minimising the use of carbon and water and the assuring that working conditions are humane are becoming critical considerations to governments, companies and consumers.

Compliance with ESG provisions, for instance, is an important part of discussions on a proposed EU Australia Free Trade Agreement.

“The project is all about improving the linkage between industry and government regulators,” says CSIRO’s Dr Ewan Sellers, Program Director Hard Rock Mining, whose team provided input from Mineral Resources to the project.

Automating such certification digitally would help companies comply with regulations, while lowering costs, making Australian minerals more attractive in the marketplace. Interest is huge.

Among the consortium partners are the Queensland and West Australian governments and the international Initiative for Responsible Mining Assurance.

Blockchain allows information to be held in an immutable form and made accessible to all that need access.

Along the critical minerals supply chain, for instance, blockchain would allow certification of compliance with energy and water use standards, as well as human rights considerations to be stored in blocks along with supporting data and information.

These information blocks are then digitally linked to other similar blocks along the supply chain in such a way as to make it impossible to change any information in any block. Certification can be made freely accessible to participants.

Tracking minerals across the supply chain

In the seven years since it was established, Everledger has built blockchains to certify supply chains not only of diamonds, but of apparel, art, wine and other luxury goods. Critical minerals is not only an area of increasing importance, but comes with its own particular difficulties.

“We wanted this to be useful to industry,” says Rakalene Condon, Head of Product at Everledger in Brisbane.

“So we spoke to a variety of companies: miners big and small; explorers and those operating mines; some involved with critical minerals, some not; some in Australia, some not; people right across the supply chain; financiers and established ESG experts.”

“Everledger called on the CSIRO for its expertise. CSIRO’s Mineral Resources business unit were able to provide knowledge, understanding and access to subject matter experts in the mining industry.

In addition, a CSIRO Mineral Resources research team had developed a cutting-edge spatial and temporal data storage platform called VoxelNET.

VoxelNET is ideal at consuming the data generated by real world processes and has the ability to track critical minerals through a global supply chain.

“Unlike diamonds, bulk shipments of ore are hard to trace back to their origin in Earth. It is also difficult to determine what processes the ore has been through,' says Condon.

"However, by using VoxelNET to record and simulate the material processes performed, each discrete volume of ore is tagged with a trackable receipt of all this data. This system can return the material properties of the ore at a given time, along with its associated emissions and resource costs matched to the custodian responsible.”

“By using VoxelNET to simulate what happens to the ore across each step of the supply chain, clients can gain a clear understanding of the material history of their ore sources, the impact that material has had on the environment, and the impact it has had on communities worldwide.”

Data61 has developed a system to identify who is trustworthy and properly credentialled without referring to centrally stored data or involving passwords, both of which are vulnerable to hacking or loss.

The idea of the system, a self-sovereign identity and key management app known as Macrokey, is that ability to authenticate a user’s identity is carried with him or her, and is used in such a way that it is automatically recognised and verified by every other member of the system using cryptography.

It is critically important that anyone accessing the blockchain and adding data or certification of compliance be instantly recognised as trustworthy by all the other participants.

The blockchain pilot has been used to demonstrate the utility of Macrokey in achieving this.

VoxelNET can created a digital twin of a mine site, tracking materials in real time.

Blockchain pilot for critical minerals

The blockchain for critical minerals needs to incorporate a vast amount of data to support certification of compliance with the ESG requirements of government and industry worldwide.

Some of that information will necessarily be commercially sensitive.

It must be there for the purposes of certification but, unlike situations where blockchain is used to back up financial transactions (as in cryptocurrencies), not everyone needs access to the data, only those certifying that standards have been met. To others, only the certification is important.

So, the developers of the blockchain had to design a system that ensured only those who needed to, had access to commercially sensitive data, and all others only to certification that that part of the supply chain complied with all requirements.

More positively, the blockchain process results in the accumulation and linkage of vast amounts of information relating to the supply of critical minerals, especially, for instance, to how much energy and water are used in mining the ore, transporting and processing it, transforming it into metal, and fashioning products.

That information may well eventually be used to expose weak links in the supply chain, those areas where the industry needs to work on coming up with better ways of utilising water and energy - the focus of future research.

“This is not simply looking at energy efficiency, but also at where energy comes from, reducing the carbon footprint, for instance, by employing solar panels or offsetting carbon usage,” Sellers says.

CSIRO, Everledger and the industry now have a prototype of a blockchain-based system to trace and certify the source and processing of critical minerals which they hope will stimulate a lot of interest.

It not only digitally automates and simplifies the process of compliance for companies, says Rakalene Condon, but is designed to align with the standards of the Battery Passport of the Global Battery Alliance, which likely will be adopted by the EU for companies selling electric vehicles into Europe. 

Modules of the Everledger platform already address recycling, re-use and repurposing programs geared to reducing the environmental concerns connected to the wholesale introduction of electric vehicles.  Ford is already using this technology in the US.

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