The Current Value Chain is fundamentally flawed
In the current system, mineral supply chains are complex and opaque. Their unnecessarily long and complex nature, due to many middlemen, often leaves end consumers confused and unclear as to where their minerals have originated from. The lack of traceability in the current value chains is preventing the industry from working at its full potential. A study from the International Peace Information Service estimated that between 75% to 98% of all gold mined in DRC was illegally smuggled out of the country, costing DRC billions in mineral receipts. Once out of the country, smugglers can attach forged documents to the minerals and trade them as ‘legal’ exports.
The industry needs a solution to fully trace the minerals it produces to guarantee ethical practices and maximise output.
Blockchain can reform the Value Chain
Blockchain can provide the necessary level of accountability and traceability- the immutability and decentralised control over a blockchain reduces the risk of fraud and ensures that all factors in the chain are accounted for. Blockchain provides end-to-end visibility of the chain; the records can include properties of the product, transfer locations, actors involved in supply chain transactions, and adherence to responsible production standards.
The use of blockchain also provides the opportunity to introduce radical new business models into the industry. Blockchain has enabled the use of smart contracts in the value chain: these are contracts that self-execute when the terms of an agreement are met. This is particularly helpful for artisanal mining as it allows miners to form direct relationships with buyers and guarantees that they will be paid directly and promptly. .
Minexx’s use of Blockchain technology
Minexx has completed the first export of minerals from DRC complete with digital payments certified on the blockchain. A common shortcoming of blockchain is that ‘garbage data in leads garbage data out’. However, our platform ensures that only accurate data can enter the chain as the digital payments are verified by the miners. Additionally, the Miners on our platform earned 15% more using Minexx’s fair price algorithm.
Minexx is now introducing smart contracts where miners are not only provided with on-time and direct payments but also access to vital services such as health insurance and electricity.
In recognition of our work, Minexx was nominated as a finalist for the Blockchain for Social Good awards.
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