Ford, IBM Blockchain Technology Sets Precedent for Mining Industry

IMB, Ford use Blockain Technology to ethically source materials from mines
Ford and IBM test out blockchain technology to improve their ability to ethically source materials from mines

In a sign of things to come for the mining industry, Ford is planning to use blockchain technology to ensure all the minerals used in its electric vehicles are ethically sourced.

Ford, IBM, Huayou Cobalt, LG Chem, and RCS Global announced last month that they are using blockchain to monitor the movement of cobalt from the Democratic Republic of Congo (DRC) to the lithium-ion batteries used in Ford’s vehicles. On Monday, a senior executive said the automaker was planning to extend the project into other raw materials such as tantalum, tin, tungsten, and gold.

“We really want this to be spread across all materials we use,” Ted Miller, Ford’s senior manager for energy storage strategy and research, said at the Investing in Africa Mining Indaba in Cape Town. “Cobalt is the outstanding one that gets lots of press, but there are others we have concerns about and that we want to create this accountability for.”

Ford and IBM Starting with Future Heavy Hitter Cobalt

Cobalt demand is forecast to increase 60-100% by 2025.

Consumer electronics, and in particular batteries, accounted for 25% of cobalt demand in 2017, according to a McKinsey report. The global consulting firm is forecasting a 60% increase in demand between 2017 and 2025, from 136 kilotons to 222 kilotons refined metal equivalent. Its forecast assumes lithium-ion battery technologies, in which cobalt is a key component, will be the prevalent battery technology for the foreseeable future. Rival consultant Wood Mackenzie is even more bullish on cobalt, predicting demand will double by 2025.

For all the positive hype around EVs, it’s hard to ignore where the raw materials are sourced. An estimated 58-65% of global cobalt supply is a by-product of copper and nickel mines in the DRC, a country notorious for high political risk and low transparency. In addition to Ford, Apple estimates that 20% of the cobalt it uses in its batteries comes from Huayou Cobalt’s DRC mines.

Cobalt and copper were two of the main sources of funds for Joseph Kabila’s “violent kleptocracy”.

According to the Enough Project, the cobalt trade in the DRC is marked by state-sanctioned corruption, violence, and human rights abuses, including child labour. Enough Project claims cobalt and copper were two of the main sources of funds for Joseph Kabila’s “violent kleptocracy”. Kabila stepped down from the presidency last month after 18 years in charge.

A New Association Between Blockchain and Mining

Time will tell how the cobalt trade operates under new president Felix Tshisekedi. Either way, Ford and IBM’s pilot project is moving ahead. The pilot, which should be completed around mid-year, involves the following steps: cobalt from Huayou’s mine and smelter in the DRC is placed in secure bags; the data is entered into a blockchain and tracked to LG Chem’s cathode and battery plant in South Korea; from there, it is tracked to Ford’s plants in the United States. IBM is also exploring the potential of chemical analysis using artificial intelligence to pinpoint the origin of cobalt.

Most people associate blockchain technology with cryptocurrency and crypto mining. If the pilot process is successful, blockchain might come to be associated with another type of mining – the mining of metals and minerals.

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The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Nadav Shemer
Nadav Shemer is a writer, researcher, and analyst specializing in mining, energy, innovation, and consumer finance. While at Mining Journal, he compiled the publication's inaugural list of the world's top 100 mining companies by revenue and reported on visits to mine sites in the U.S., Africa, and Europe. He has also worked at FCBI Energy, where his publications included a series of white papers on decommissioning of North Sea oil rigs and reports on petrochemicals construction costs. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.
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