By Nicolaas C Steenkamp
Blockchain was introduced as the verification method for cryptocurrencies, but over the past year, it has found applications in most sectors of the market, including having potential in mines and quarries.
The start of 2018 saw the launch of several ‘proof of concept’ blockchain applications in the mining and minerals sectors. The main players to date have been the precious metals and gemstone producers that need to track the provenance of their products to prove it is not conflict or ‘blood’ minerals. The bulk and industrial mineral sectors have started to evaluate platforms capable of tracking products from pit to final consumer delivery point.
Blockchain has several on-site applications that may potentially streamline the quarry process. Quarrying companies often acquire quarried material from third parties’ smaller operations to blend with their own quarried material. Blockchain can allow the automation of quarried material acquisition and transfer between quarried material suppliers and the main company, and between major quarry material producers and traders. Real-time information on demand allows the quarry to respond accordingly and reduce the costs of intermediation.
Advantages of blockchain
One of the main advantages could be in the field of reconciliation of pit to plant to stockpile. The platform will also be able to track the amount of material quarried and passed through the processing plants, providing the company with a more complete flow tracking of material and auditing. This will allow the quarry to measure production targets and waste versus saleable product movement. When coupled with precise measurement processes and technologies, blockchain can automate and enforce this reconciliation such that each value is registered in the ledger book automatically.
In terms of transport, the blockchain will be able to track the load from the point that a value is allocated at the gate weighbridge, to the final delivery destination. It has the potential to assist with the road freight transport aspect, too. Blockchain can bring more flexibility to the freight hiring process and create a cargo automatic hiring process. Specialised systems could hire the haul trucks automatically and register the contract in a distributed ledger system. This can reduce freight costs significantly and save significant time in the process to reduce contract lead time from days to minutes.Blockchain platforms connected to the warehouse system can assist with placing stock orders or be effective in a more dynamic environment, such as ‘just in time’ delivery — autonomous peer-to-peer telemetry (ADEPT) systems that essentially enable a kind of self-managing Internet of Things (IoT). ADEPT systems could, for example, enable autonomous vehicles to reorder consumable stock when supplies run low, with payments made automatically upon delivery.
Blockchain allows the automation of the procurement process, using auction engines, leveraging their negotiation capabilities with the market and allowing opportunistic purchase strategies. Service contacts are established and registered automatically. Blockchain can automate the entire process through smart contracts and ensure that the records are tamper proof.
On the downside
Blockchains are a rapidly evolving technology with ongoing developments, especially to improve scalability and confidentiality. Some of the potential pitfalls of introducing a blockchain to the quarry industry may be related to the telecommunication systems. As more transactions are made on the blockchain, it becomes increasingly more complex and the transaction verification time increases. It would also require the quarry to have constant Internet connectivity and to upskill their staff to use the new technology effectively. Introducing systems like blockchain will also reduce the number of staff required, while South Africa in particular still has a need to increase the number of unskilled jobs.
Once the ‘proof of concept’ blockchains have run their course and the security issues and other bugs have been sorted out, the industry will need to agree on a standard and uniform use of a blockchain platform across the sector. The selected blockchain and requirements should also not exclude small-scale producers by making the process too complex or expensive.