Thanks to the Internet of Thing (IoT), inanimate objects such as machines and devices can communicate with each other in the same way humans do. While this technology is making mines safer than ever before, it has also opened new doors for hackers and competitors to break into company data and access confidential operational information. According to Softpedia, 22 mining companies reported 17 major cyber-attacks between 2010 and 2016 including Rio Tinto, BHP Billiton and Fortescue Metal Groups.
Mexican companies are also starting to be concerned as Fresnillo, the biggest producer of silver in the world and the largest producer of gold in Mexico, announced cybersecurity is one of the top 10 risks the company faces in its 2017 assessment. “As a mining company, we may be under threat of cyber-attacks from a broad set of attacker groups, from hacktivists and hostile regimes to organized criminals,” the company said in its annual report. “Certain groups may also attempt to exploit vulnerabilities, created by the industry’s heavy reliance on operational automated systems and IT.”
A Promising Solution
But the creation of cryptocurrencies through blockchain could provide a solution and the mining industry is quickly becoming one of the earliest adopters. According to Shabir Ahmed, Mining Industry Advisor at SAP Africa in his report, Leveraging Blockchain to Revolutionize the Mining Industry, blockchain was introduced in 2008 through the release of bitcoins but the industry discovered that it had potential to be used outside financial services and government. Investopedia explains that it works as a digital ledger that distributes information through a synchronized network in multiple sites or institutions. These transactions can have administrators that are automatically notified when a change is made or a new movement occurs without the need for a third party.
Blockchains may be the underlying technology of cryptocurrencies, but Ahmed explains that it has many benefits to offer the mining industry such as the automated registration of mineral rights and the implementation of a cargo hire process that works in an “Uber-like” manner. It can also encrypt data being generated by IoT and automatically execute contracts for the procurement of everyday processes such as tires and diesel.
While it can greatly protect companies from cyberattacks and facilitate processes, it also has the added bonus of improving the transparency of the industry. This is a particular priority as consumers and countries are starting to create requirements for companies not only to disclose the source of their materials but are also increasingly demanding ethical supply chains.
Innovation in Mining
Considering the obligations that mining companies have to meet in the 21st century, De Beers Group, a company that provides one third of the global supply of diamonds, has decided to lead the way by developing the first blockchain platform of the diamond industry called Tracr.
After months of research and development, the company finally announced in May 2018 that it had successfully tracked a 100 high-value diamonds from extraction to the retail and expects to open the platform to the public later in the year. “When fully operational, Tracr will provide consumers with confidence that registered diamonds are natural and conflict-free, improve visibility and trust within the industry and enhance efficiencies across the diamond value chain,” the company reported on its website. Another case of mineral tracing is Gemfields’ partnership with Gübelin Gem Lab to place nanoparticles in all Kagem Mine emeralds to improve levels of transparency, reported Mining Review.
If proven successful, the use of blockchain could easily spread to other segments of the mining industry and additional initiatives have already been put in place for the gold market. The London Bullion Market Association (LBMA), which is in charge of the world’s largest spot gold market, announced in January 2018 that it seeks blockchain proposals to prevent finance terrorism, money laundering and avoid conflict minerals, reported Kitco. “Blockchain cannot be ignored,” stated Sakhila Mirza, Executive Board Director of the LBMA in an interview. “Let’s understand how it can help us today and address the risks that impact the precious metals market.”
The Next Step for Mining
Although the incorporation of blockchain is a sign of openness in the industry to using new tools, the mining sector still has a long way to go, according to Bruno Juanes, Chief Innovation Officer at Deloitte Consulting Group. “The marriage between mining and technology companies is in its infancy,” he said in an interview with Mexico Mining Review.
But as technology continues to permeate mine operations, a whole new universe of possibilities will become available for the industry. “Blockchain, an important new development, could allow tokens for underground gold to be created to serve as currency, bypassing the need to mine it at all,” said Philip Hopwood, Global Mining Leader at Deloitte. “And virtual mining and simplified supply chains could derive from this. The pace of technological innovation just continues to pick up.”