According to a report by Reuters on 29 June, the BHP Group completed its first blockchain-based iron ore trade with China Baoshan Iron & Steel Co Ltd in a deal worth around $14 million. The transaction was carried out through a blockchain platform created by a Canadian-based technology company called MineHub.
Per the two separate statements by both MineHub and BHP Group, using blockchain technology, the spine that structures digital currencies like BTC and ETH would strengthen efficiency and transparency. However, the statements did not indicate whether the BHP Group had used blockchain technology in the past.
Blockchain-based iron ore trade scales down paperwork
The trade in iron ore involved a transaction linked to iron ore, a commodity that the firm regularly trades. The MineHub blockchain platform was used to digitally process trading terms, exchange documents, and provide updates on real-time cargo transport.
Notably, the use of blockchain technology by BHP Group is part of the firm’s plan to digitize its commodities trading sector. According to BHP Group’s sales and marketing officer Michiel Hovers, blockchain technology will help scale down the burden of manual paper documentation processing.
Blockchain technology to enhance efficiency
In the past couple of years, commodities firms have been seeking blockchain solutions to save money. The commodities sector is known for its over-reliance on paperwork and large-scale documentation, which brings up other complications. According to Hovers:
“The bulk commodity industry needs a digital revolution to reduce physical documentation processes.”
The blockchain-based iron ore trade was the first of a string of transactions on the MinerHub Technologies Platform; involving outside partners. According to MinerHub Technologies chief executive Arnoud Star Busmann:
“Current pandemic events and fraud cases in the commodity trading industry are causing a step-change; in the adoption of digital solutions.”
Furthermore, the Canadian blockchain firm outlined that it was creating a blockchain-based system; for base metal concentrates, structured finance, and emissions tracking.