SUPPLY CHAIN TRANSPARENCY FOR THE GOLD MINING INDUSTRY
Secure tracking each piece of gold electronically
The gold mining industry in the United States is subject to extensive regulatory compliance and numerous environmental and labor regulations. Financial institutions must trace the origin of every gold bar they are given, for example as credit collateral. However, there is no secure or convenient way to track the bars to ensure that:
- the gold comes from a certified gold mine
- the gold mine was certified at the time of mining
- all refineries and other supply chain participants have required certifications
These long-standing industry problems motivated open-minded entrepreneurs to disrupt the industry by founding a startup that would finally end these problems. The goal was to create a supply chain transparency platform capable of tracking each piece of gold electronically and in a secure manner. At the time, there were already similar successful businesses in other industries that were using blockchain-based solutions, for example for jewelry and medical implant tracking, and these provided us insight for creating the technical solution for this project.
Existing platforms utilized the basic technical approaches to track such items as medical implants. Gold is more difficult. The mine produces large ingots of unrefined gold, additional refineries then clean it, so one unrefined gold ingot produces several bars of smaller high-grade gold. Other institutions then melt these slivers into even smaller bars, until the original “product” is crushed into components. It is necessary to track the path of each component, all the way back to the big ingot from which it originated. The previous existing systems were not able to do this.
The solution was to apply a QR code to each ingot and to the subsequent ingots to create a custom system to register all operations and to determine where there was a blockage. A blockage could include, for example, ingot A was turned into ingots B, C, D by X LTD, ingot A no longer exists, or ingot B was moved from companies X to company Y with the help of transport company Z.
The system was created by using Ethereum and the process of operations was programmed by utilizing smart contracts.
Result and Future Plans
The system is currently in the MVP stage. After receiving the first feedback from users, we have added features that not only solve the task of regulating the gold market, but also automate the work between suppliers and gold recipients. The future product will solve two issues:
- Primary: tracking the origin of gold
- New: automation of document circulation between gold mines, refineries, and other participants of this market
The MVP was approved by the National Mining Association and (most likely) will receive investments from this organization.