We live in an economy that supplies us with an enormous amount of products, but it can be hard to figure out where they all come from. The supply chains that exist for products like smartphones or electric cars are unbelievably complex. Ford Motor Company is teaming up with a group of companies, including IBM, to create a blockchain-based platform that will allow a much higher degree of oversight for their cobalt supply.
There are a handful of obscure metals which make modern technology possible. In addition to Rare Earth Elements (REEs), minor metals like vanadium, lithium and cobalt are being used in far greater quantities. Most of the cobalt that is mined today comes from the Democratic Republic of the Congo (DRC).
At the best of times, the DRC faces developmental difficulties. In many cases, the cobalt that flows from the DRC into the global marketplace is simply untraceable. While it is a near certainty that it mined in the DRC, how it was extracted is a complete mystery. Near-zero transparency poses a problem for intermediaries like the London Metal Exchange (LME), and also for the major corporations that need access to vital metals in increasing quantities.
Ford Sees Blockchain as the Solution
Ford is among the global automakers who is scrambling to lock-down supplies of battery metals. A typical electric car uses around 20 pounds of cobalt, which should illustrate why the once-obscure metal has become so popular recently.
Lisa Drake, the vice president of global purchasing and powertrain operations for Ford Motor Company, said that, “We remain committed to transparency across our global supply chain,” and, “By collaborating with other leading industries in this network, our intent is to use state-of-the-art technology to ensure materials produced for our vehicles will help meet our commitment to protecting human rights and the environment.”
The collaboration Drake references above involves Huayou Cobalt, IBM, LG Chem and RCS Global. It will employ IBM’s hyperledger-powered blockchain to create a record-keeping platform to ensure that the cobalt entering the supply chain is coming from responsible sources.
Read: What is Hyperledger?
IBM is Crafting Accountability
Manish Chawla, the general manager of the global industrial products industry for IBM, commented that, “With the growing demand for cobalt, this group has come together with clear objectives to illustrate how blockchain can be used for greater assurance around social and environmental sustainability in the mining supply chain.” Chawla continued, “The initial work by these organizations will be used as a precedent for the rest of the industry to be further extended to help ensure transparency around the materials going into our consumer goods.”
The platform the team is working on will track cobalt from its source, all the way through the refining process until it is delivered to the end user. The group has already demoed the system. A test tracked theoretical cobalt produced at Huayou’s mine in the DRC as it passed through LG Chem’s cathode and battery plants in South Korea, and then to a Ford facility in the US.
Dr. Nicholas Garret, group CEO at RCS Global said that, “As the validator of the network, we will bring our vast experience working on responsible sourcing at all stages of the supply chain at all times. Our collective effort allows participating companies to progress from human-led risk management to technology-led impact generation in a highly efficient and cost-effective manner. Augmenting crucial human expertise and experience, this is a demonstration of technology for good, empowering vulnerable communities and protecting the environment. We are proud to be a member of the network.”
Anyone in the network will be validated using responsible sourcing standards created by the Organization for Economic Cooperation and Development (OECD). While this isn’t a perfect solution, it is far better than anything up to this point.
Building a Better Marketplace
Ex-JP Morgan exec Blythe Masters has been another proponent of using blockchain to track global supply chains.
Last year Masters told CoinDesk that, “The application of this technology is by no means limited to the world’s biggest market infrastructures,” and also that, “It goes well throughout financial services, well beyond capital markets and beyond financial services into all the other industries that have a vested interest in improving the efficiency of their workflow orchestration.”
Masters was no doubt correct, and it looks like another massive corporation will be leveraging IBM’s blockchain expertise to improve the ‘ efficiency of their workflow orchestration’, and also create transparency in a market that is notoriously opaque.