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Blockchain & the Gold Standard for a Conflict-Free Supply Chain

Conflict minerals making their way into the electronic supply chain presents a challenge to companies that want to act both legally and ethically. Tracing such minerals to their source is not straightforward or simple. Blockchain technology can solve that problem.

The Responsible Gold supply chain  is designed to track “responsibly sourced gold from mine, to refinery, to vault.” It’s put out by Emergent Technology, and has first been applied to gold mined by Yamana.

The first Responsible Gold Kilobar. Photo courtesy: Emergent Technology

The first Responsible Gold Kilobar. Photo courtesy: Emergent Technology

The way it works, according to Emergent’s announcement, is by tracking movement every step of the way: “Miners, refiners and other supply chain participants use a mobile application that scans smart chips in tamper-proof seals to record transfer of custody and other data on the Responsible Gold blockchain.” That blockchain was set out in 2017, though Yamana started working with Emergent on setting up the platform a year before that.

This could make it much easier for companies that have been grappling with the difficulties of being sure they have eliminated all conflict minerals in their supply chain when each mineral can go through so many different hands along the way. Because it is both a precious metal and often used in funding conflicts, gold is particularly susceptible to that problem.  

The same year that the plans for the platform started taking shape – 2016 – was when Gary Niekerk, acting director, Intel's Office of Corporate Responsibility, was interviewed by EBN about his company’s commitment to eliminating all conflict minerals. He observed, “Gold is the most difficult because of its high value which makes it more prone to smuggling.”

Niekerk also pointed out that tracking conflict minerals is an active and dynamic process, not something you can just set and forget: “The supply chain is not static; we are continually adding new suppliers, and our suppliers are adding new suppliers, so it takes ongoing diligence to maintain your systems.”

Given that necessity for active tracing blockchain technology makes sense for the tamperproof transparency and authentication inherent in the public ledger. Blockchain technology also forms the basis of smart contracts that maintain the record among all the players in  the gold supply chain, “including miners, refineries, logistics providers and insurance companies,” according to the press release from Emergent and Yamana. 

In the same release, Peter Marrone, Yamana's chairman and ehief executive officer, said that while they already have achieved independent verification of their gold’s conflict-free status,  they “see significant efficiencies, value and potential for greater assurance by tracking title and provenance of gold on a blockchain data network throughout the gold value-chain.”   

 “A digitized supply chain process will improve efficiency and transparency.” That’s what Marrone said about gold, but it applies to any product that one wants to trace – even coffee, according to a recent Wall Street Journal article. 

Accordingly, I predict that we will soon see this kind of technology applied to other areas that of the supply chain that require visibility. Blockchain can be helpful in bringing transparency to a number of areas that pose ethical concerns, like accountability for recycling, general sustainability, and trafficking.

 We should be able to use blockchain to guarantee ethical sourcing, not just for gold itself, but for all components of the electronic supply chain, from metals to labor. The gold standard then will be of a completely authenticated supply chain that is held to the highest legal and ethical standard.

1 comment on “Blockchain & the Gold Standard for a Conflict-Free Supply Chain

  1. rchaithanya
    December 6, 2018

    Thanks for the informative article. Check this article : https://socialprachar.com/31-10-18-what-is-blockchain-technology/?ref=blogtraffic/chaithanya

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