Could blockchain technology be the answer to stopping violence surrounding conflict materials? Rwandan companies dealing in tantalum (and tantalum-containing products) can now use a blockchain-based supply chain platform developed by Circulor to test the idea.
The Rwandan government, together with London blockchain startup Circulor, has created a blockchain-based solution for a transparent record of the movement of tantalum as it progresses through the supply chain, according to an October 16 announcement.
The country of Rwanda is a world leader in the production of tantalum concentrates and metals – a material used in consumer electronics such as smartphones and laptops. Although the mining of tantalum has proven to be an excellent source of revenue for the country’s struggling economy, in neighboring regions the practice has been connected to child labor, sexual violence against women, and murder.
The joint project between Circulor and the Rwandan government will give companies the opportunity to use Circulor’s blockchain platform to “tag and trace tantalum mined in Rwanda as it passes through the supply chain.” This way, buyers, investors, and regulatory bodies can be confident about the source of tantalum-containing products.
According to Francis Gatare, the CEO of the Rwandan Mining, Petroleum and Gas Board and a government minister, said in the Circulor announcement that the system is already live and is being used by at least one Rwandan exporter.
According to an article on the tracking of tantalum published by Mining Technology in April 2016, the global demand for technology has increased the need for metals such as tantalum, and the demand is expected to continue to rise. Although Rwanda is now a world leader in the production of tantalum, that was not always the case.
In 2000, Australia was a world leader in the production of tantalum concentrates. However, due to the rising cost of extracting the mineral coupled with an unfavorable exchange rate, by 2014, the bulk of mining moved to the Democratic Republic of the Congo (DRC) and Rwanda. Rwanda reportedly has a good reputation in the mining industry, and the mines are viewed by Rwandan citizens as an asset.
However, that is not the case in the DRC, which, according to Mining Technology, now produces 17 percent of the world’s supply of tantalum concentrates. The DRC’s government has historically failed to secure the mining industry against armed militia groups who have seized the opportunity to take over these mines. This has had disastrous consequences to human rights, including sexual violence, murder, theft, and child labor.
In 2010, the Obama administration passed the Dodd-Frank Act, which obligated the US Securities and Exchange Commission (SEC) to develop rules requiring certain companies to disclose the source of “conflict minerals” and how these companies are using said materials.
According to the SEC, “Congress enacted Section 1502 of the Act because of concerns that the exploitation and trade of conflict minerals by armed groups is helping to finance conflict in the DRC region and is contributing to an emergency humanitarian crisis.”
Also, according to Mike Loch, the president of Responsible Trade, the tantalum industry has been very accepting of the rules stipulated in the Dodd-Frank Act, with 95 percent of the world’s tantalum smelters participating in the program. Researchers from the Enough Project found that as of April 2017, 420 mines in Congo had been verified as conflict-free. This is a significant development, as the report states, “Before U.S. conflict minerals regulations were implemented in 2012, end-user companies did not trace or publicly report on whether the tin, tantalum, tungsten, and gold – otherwise known as ‘3TG’ or ‘conflict minerals’ – in their products originated in conflict zones in Congo.” (It is important to note, though, that in 2017, President Trump vowed to dismantle the Dodd-Frank Act without revealing specific actions he would take to do so.)
Although the Dodd-Frank Act has made great strides to create a transparent record of the tantalum supply chain, it still has some fundamental problems.
One of the most prevalent issues in the process of tracing the supply chain is the amount of middlemen, paperwork, and manual input of data it takes to develop such a record. This process not only increases the chance for participants to make mistakes and malicious actors to input false data, but it is also very time-consuming. It reportedly took Intel five years to fully research its supply chain.
Blockchain technology allows supply chain tracking to be done much more quickly and efficiently.
Blockchain has the potential to create transparency in any supply chain, including those related to the mining and production of “conflict metals.” Like any other form of documentation, however, the data provided is only as good as the people providing said data. If the people in charge of the mines in Rwanda, the smelters in East Asia, and the American electronics companies truly want “to eradicate sources of funding for conflict minerals,” then a true version of the tantalum supply chain will be developed. However, if unscrupulous people who are only interested in lining their own pockets and profiting off slave labor are granted access to the blockchain platform, the entire system will be compromised no matter what kind of technology is used.
This is not the first blockchain solution that has been considered to provide a transparent supply chain record of precious metals. In September of this year, ETHNews reported that Hong Kong-based Chow Tai Fook Jewellery Group developed a blockchain-based smartphone app to provide customers with information regarding the origin and quality of its diamonds.
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