Technology start-up company Minexx has broadened that effort, implementing blockchain technology to its pilot site in the Democratic Republic of Congo (DRC) in an effort to bring transparency and trust to the mining industry.
Problems surrounding occupational safety in the artisanal mining space have plagued the sourcing of raw materials and minerals for years, prompting an industry-wide push towards better engagement with the supply chain on responsible sourcing and due diligence.
In October, the LME bolstered its requirements for responsible sourcing initiatives for its key stakeholders, outlining three routes to compliance informed by the Organisation for Economic Co-operation and Development (OECD), in addition to a target of full stakeholder compliance by 2023.
But for Marcus Scaramanga, chief executive officer of Minexx, and for many others in the industry, a lack of trustworthy data in the mining supply chain continues to hinder progress, highlighting that without necessary due diligence, proper accountability remains unachievable.
Marcus Scaramanga, CEO of Minexx
Minexx works to tackle this problem at its origin by using blockchain technology to provide transparency from mine site to manufacturer, connecting miners to the world by formalizing artisanal mining processes to ensure miners get a fair price.
In addition to traceability, Minexx also offers services that aim to uphold industry development. These include connecting artisanal miners to coaching services, insurance and solar electricity.
“When you get into the nitty gritty of this, and have to actually start making payments to miners, it’s a big challenge,” Scaramanga told Fastmarkets. “You have to ensure configuration per market, and that scalability is in place to correctly apply a fair price system that covers different marketplaces and geographies.”
“The Minexx platform is a core part of this, and works to provide certification on minerals; where they were sourced, in what environmental standards, who sourced them, how much they got paid for them, and proof of that payment,” Scaramanga added.
In a 2019 report, the International Labour Organisation (ILO), a United Nations specialist agency, estimates that some 40 million people work in artisanal and small-scale mining (ASM), compared with around 7 million people working in industrial mining.
Yet Minexx’s use of blockchain technology addresses the problem at its source, and while the company intends to eventually apply a fair price algorithm to its processes, the scale of the ASM landscape is a difficult terrain to navigate.
Minexx has also successfully trialed the use of its platform at a pilot site in the DRC. The company plans to expand operations to 20 sites in Rwanda and the DRC next year while leveraging collaboration with the Responsible Minerals Initiative (RMI).
“Our platform has so far focused on tantalum and tin, and is based off mines in Rwanda and the DRC – there are challenges moving to other minerals and geographies,” Scaramanga said.
“Different markets often share different dynamics,” Scaramanga added. “Gold for example, holds extremely high value even as a raw material and is easier to smuggle. It is also characterized by miners using harmful mercury to extract the gold. All of this must be considered when providing our digital responsible mineral certification.”
For Minexx, expansion of the platform has to also face the challenge of educating prospective users into the adoption of blockchain technology within the mining space.
This goes much further than simply digitalizing payments however, Scaramanga explains.
“Large segments of the mining community have never had access to a bank account before. One thing we are proud of is just how much [financial] educational infrastructure we are laying down for people,” Scaramanga said.
“The financial costs of that education into digital payments is not something we can take for granted, but we’ve got a lot of experience in the team to address that challenge,” Scaramanga concluded.
Responsible sourcing initiatives are now a growing component of the metals and mining industry, with the London Metal Exchange recently issuing its requirements for compliance.