Mining Giant BHP, China’s Baosteel Complete $14 Million Blockchain-Fueled Iron Ore Trade
The world’s largest mining company BHP Group has completed its first blockchain trade in iron ore with China Baoshan Iron & Steel Co. Ltd., commonly known as Baosteel, in a transaction worth around $14 million.
The trade between the world’s largest mining company and the world’s largest steel producer is the latest effort from commodities groups who have been seeking to apply blockchain to digitize and simplify their sector that still uses millions of paper documents.
BHP said that the trial transaction using the MineHub platform was worth about $14 million and was delivered in June. According to a Reuters report, the platform processed contract terms, exchanged digital documents and provided real-time cargo visibility via blockchain implementation.
“The bulk commodity industry needs a digital revolution to reduce physical documentation processes,” said BHP sales and marketing officer Michiel Hovers.
Baosteel also attaches great importance to the application of new digital technologies such as blockchain in trade business. Earlier this May, the company has made a yuan-denominated iron ore purchase worth over 100 million yuan from Anglo-Australian miner Rio Tinto Group using blockchain technology.
The shift to electronic documents and data in all areas of life is one of the key economic developments of this century, which brings efficiencies, cost savings and new opportunities.
Digital technologies represented by blockchain are creating new options for streamlining and simplifying paper processes, and for disrupting long-established business models.
Blockchain has attracted serious interest from some of the biggest names in commodities trading, like Gunvor and Mercuria, as well as oil-and-gas majors like BP and Shell, and big banks like Societe Generale and ING.
In China, big-name commodities groups like Sinochem Group and coal exchange have early leveraged blockchain technology in digitizing their business. According to Sinochem, the application of blockchain helps enhance the efficiency by more than 50% and optimize over 30% financing cost compared to the traditional approach.
Following the country’s president Xi’s blockchain endorsement, the nascent yet disruptive technology is poised to be massively adopted in China and the rest of the world.