9 September 2021
Blockchain has emerged in recent years as a powerful new technology. Blockchain technologies are an important step forward in the mining industry and could present new solutions to existing and future mining activities. Consequently, we’ll be discussing the importance of blockchain in mining in this post.
What is blockchain?
Blockchain is a system of recording information that prevents data manipulation. This means that information stored on a blockchain cannot be changed, hacked, or cheated. A blockchain is in essence a digital ledger of transactions.
Each transaction that takes place on the blockchain is duplicated and distributed across the network of computers connected to the blockchain. Every time a new transaction is recorded on the blockchain, a record of the transaction is added to each participant’s ledger.
It is also important to understand the difference between public and private blockchains, as they each have unique features. A public blockchain is a blockchain where anyone can see the ledger and join the blockchain.
A private blockchain is a type of blockchain where only a single organization has authority over the network. In other words, a private blockchain is not open for public people to join in. In general, all blockchains have the following properties:
The properties of blockchain:
- A blockchain is programmable
- Secure: all records are individually encrypted
- Distributes: all network participants have copies of the ledger
- Immutable: any valid records are unchangeable
- Each transaction has a timestamp
- All network participants need to agree to the validity of the records
- The identity of participants remains anonymous.
Blockchain was originally created with financial transactions in mind, as it allows unique digital items to be created that nobody can change. However, this technology can also be applied to mining.
The importance of blockchain in mining
Blockchain in mining can be used in the following areas:
Engineering, construction, and handover of the mine site
Engineering, construction and handovers of mine sites can be time-consuming and costly. Managing and maintaining the accuracy of extensive information can be difficult, and if not done right can result in additional costs and delays.
Blockchain gives mines the ability to trace transactions during complex processes, ensuring trust and efficiency.
Blockchain could track materials in the mining value chain, from the raw materials to the finished product. Blockchain can also provide transparency to all mining partners involved with the value chain.
Automation of invoice reconciliation is also a possible use for blockchain. As all parties involved would have access to the files, while disputes over prices and outstanding invoices are avoided.
Blockchain can assist mines in tracking where materials come from, where they go into production and whether they are sustainable or not.
Compliance and mining lease management
Mining companies need to manage approvals of documentation created in the exploration, resource/reserve estimation, mine design and planning processes. Blockchain can improve the mechanism of custody and control, with proof embedded in the documents that have passed approval.
New approach to mining
Digital solutions have become a key component of the strategic direction and vision of today’s mining companies. Mines are often associated with the perception of being unsustainable and having a negative impact on the environment. Blockchain can allow mines to provide trustworthy data on their sustainability, essentially aiding mines in building a responsible and sustainable future.
Advantages of blockchain in mining
There are three main aspects of mining where blockchain technologies could provide added value and have a strong impact. Firstly, blockchain can ensure trust and work compliance in engineering, construction, and handover of mine sites.
Secondly, blockchain improves the traceability of reserve estimation for stock exchange reporting. It is also useful in lease management and facilitating the workflow and visibility of documents.
Blockchain can also assist with quality control, asset management and safety. Being able to tie in Original Equipment Manufacturer (OEM) devices into the central blockchain can aid with sufficient safety monitoring, as data in a blockchain is considered trustworthy.
Limits of blockchain in mining
However, while blockchain in mining may have some advantages, there are also limits to its use. Business processes can be transformed only if several conditions are met, such as the creation of a broad network of transactions and the willingness of participants to provide true information.
Blockchains can also be expensive to set up and maintain. There is not yet a clear view of how blockchain would function alongside data warehouses, data engineering, and data science. Organizations should ask themselves how blockchains will fit into their existing enterprise, a question that is not easily answered. Things such as reporting on data, pulling data from warehouses etc. should be considered.
Blockchain in mining does have potential, but there are complex questions and challenges tied to setting up and integrating a blockchain into an existing enterprise.
Why not let us help you answer some of those questions? Here at Integrove, our experts in digital solutions can help take your business to the next level.