Product Passports confirm origin, carbon footprint and any number of other variables.
Early in March, tech firm Minespider secured its third contract of relevance to Latin America, signing with Nicaraguan private equity group Integra Group to trace the responsible provenance of gold from artisanal and small scale mining (ASGM) operations in Peru.
Minespider is a blockchain-based traceability platform that allows companies to pair the commodities they produce with ethical production and sustainability certificates at various stages along their supply chains, ensuring that the information is true and available to all parties involved in the business.
At the core of the solution is the idea that mineral producers issue batches with blockchain-secured digital IDs called Product Passports, to track their shipments downstream. The passports contain information such as provenance data, due diligence documents and carbon emissions data.
FROM EITHER END OF THE CHAIN
Minespider’s website is divided into landing pages for two main client types: upstream producers and downstream commodity buyers.
Minespider CEO Nathan Williams explained to Chile Explore Report that the decision to directly target downstream partners arose because it is those end-product manufacturers – the household names – that most want to reduce their environmental footprint, and they saw a direct connection with the mines as the best means for ensuring that.
The same logic also applies at the exploration end of the chain, Williams confirmed, since it’s more and more common for investors to prefer projects that have traceability in mind.
Targeting the full chain is inefficient because the more people there are deciding things the slower the process will be, he noted, adding that tracking and certification at just one part of the chain is better than nothing, and is a first step that could easily lead to further implementation. Thus, Minespider is now moving its marketing efforts away from full, end-to-end projects.
Given that the trend towards transparency could make black market metal less desirable and hence cheaper, there’s a possibility that this could have effects on the broader market. However, Williams pointed out that the value of traceability goes beyond pure economics.
“Publicly traded firms can’t get away from needing traced metals, it will affect their stock price and credit rating. Once you’re publicly traded, to sell your goods, you need more and more information attached,” he explained, adding that even if the black market price is lower, there will be fewer buyers for that material.
ROLE OF GOVERNMENTS
Outside Latin America, Minespider’s projects include a mission with the British Columbia government to ensure interoperability between both entities’ blockchain platforms. The BC government is building a blockchain system to host and distribute mine credentials, and interoperability means such credentials could automatically be included among the certificates supported by the Minespider product passport.
This raises the question of whether Minespider should add a third landing page to the site, inviting government entities.
Williams agrees that it’s important to get Latin American governments involved, since it’s in their interest to be positioned to compete globally, and more so since the US is trying to create rare earth and battery metal supply chains that don’t involve China.
However, in the case of accelerating the transition of artisanal operations to formal certification he believes firms like Minespider can have some influence simply by providing solutions that make life easier for formal operators.
Publicly traded firms can’t avoid
the need to track metals. Failure
to do so could affect their stock
price and credit rating.
“You can’t expect artisanal miners to have the same processes and procedures as an industrial mine, but if we want responsible mining they will need to formalize to some degree. Buyers in the market have a role to play and can help to normalize artisanally-sourced material, provided they have the tools to prove they were sourced responsibly,” he told Chile Explore Report, adding that governments often prefer to follow what the industry wants to do because that way they know that a particular trend is not going to hurt the economy.
ALL IN THE NAME OF ESG
Williams stresses the importance of the solution adding value and practical benefits – such as cutting out intermediaries – that will appeal to the clients’ shareholders, but confirms that Minespider prefers to sell itself primarily as a vehicle for supporting the clients’ standing in terms of ESG, and will prioritize working with companies that spend extra resources on that area.
That said, he recognizes that geopolitical issues are becoming increasingly important. The Russia-Ukraine conflict is a prime example, as globalized firms further downstream in the supply chain beyond the miner and its first buyer may incur sanctions if they can’t prove that their Nickel came from outside of Russia.
Similarly, for trade agreement purposes it may be necessary to certify the percentage content from certain countries of origin, and certification of carbon emissions is becoming more and more sought after.
The agreement with Integra builds on two prior projects in Latin America: First, a 2018 partnership with a consortium tracking tin end-to-end from Peruvian miner Minsur to final client Volkswagen, and involving technical partners Google, Cisco and SGS; and secondly, an October 2021 contract with Brazilian mineral trading marketplace Minery, whose main goal was to speed up trade by making tracking and certification more transparent.
Integra manages investments mainly in clean energy and agribusiness, but will be implementing Minespider on behalf of Peruvian client Paltarumi SAC, a gold
processing plant that collects and processes gold from government-permitted artisanal & small-scale mining firms. Integra and Minespider plan to co-develop additional analytical tools that aim to reduce the barriers to traceability for other ASGM operations.
WHAT NEXT?
Minespider last engaged in financing in 2020 with €2.8mn from multiple sources including the European Commission, followed a few months later by a grant of over €180,000 to help develop the OreSource application, which helps international vendors comply with EU conflict mineral regulations.
Williams doubts that Minespider will develop other niche products, preferring to perfect the core platform as a general-purpose product that can address the ever-increasing number of supply chain risks and needs.
That said, the firm is now raising funds to finance expansion of the sales team, and Williams believes Minespider is now on the radar of firms that typically invest in mining majors.
Ideally, this would triple the sales team in a company that currently numbers 17 employees, and part of the expense is the need for staff who are knowledgeable in the way supply chains work and the kind of data collection that each stage requires, in order to better advise the clients.
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