Blockchain protocol for responsible mineral sourcing

Project Information

Minespider

Grant agreement ID: 835775

DOI

10.3030/835775

Project closed

EC signature date 15 November 2018

Start date 1 December 2018

End date 31 May 2019

Funded under

• INDUSTRIAL LEADERSHIP - Innovation In SMEs

Total cost

€ 71 429,00

EU contribution

€ 50 000,00

Coordinated by

MINESPIDER AG
Switzerland

Periodic Reporting for period 1 - Minespider (Blockchain protocol for responsible mineral sourcing)

Reporting period: 2018-12-01 to 2019-05-31

Summary of the context and overall objectives of the project

Minespider was created to address a clear challenge in the mineral supply chain – ensuring and demonstrating the ethical, sustainable sourcing of conflict minerals. Minespider is an open source, interoperable blockchain protocol for supply chain due diligence. Built upon blockchain principles, Minespider offers all stakeholders in the chain the opportunity to introduce and track the origins of the materials extracted, no matter their transformation along the manufacturing process. By making it easy to attach, share, assess and verify information such as compliance related documentation, Minespider gives companies a better understanding and control of their supply chain and their impact on compliance and responsible sourcing.

Due diligence is a crucial obligation and a desired contribution, but also an insanely complex hassle to all stakeholders who have to ensure and demonstrate the ethical and sustainable sourcing of their inputs: conflict minerals, but also other metals or goods, from chemicals to medicals as well as raw materials like cotton for textiles, to foods like coffee or valuable ingredients. Demonstrating the origin and the compliance of the resources in their products or operation is currently challenging and costly. Even if the company provides the required documentation, there is no way of completely eliminating the possibility of forgery.

Minespider’s innovation addresses European business challenges, as it creates a new technology concept that will help European businesses resolve difficulties relating to demonstrating certification and passing it upstream or to different authorities in an integrated, digitalized or centralized manner.

The feasibility study as part of the Phase 1 project helped validate the viability of Minespider’s technology and the market acceptance and future market potential of our solution. Phase 2 promises a rapid commercialization and market reliability capacity of the Minespider’s solution in our target markets.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

During the Phase 1 project (Dec 2018 – Jun 2019), we have organized multiple customer pilots with several Fortune 500 companies and their suppliers in order to gain a complete understanding of the Minespider solution’s technical acceptance, demand, willingness to pay, pricing validation, and expected conversion rates.

We have interviewed over 20 potential customers regarding their needs to gain a complete understanding of the solution’s acceptance. We are running trials over several months with Volkswagen and major players in its lead-driven supplier chain who provide it with the batteries for running the cars (respectively components for such batteries), which use lead as a key input. Furthermore, Minespider has started working with a Belgian gold refinery in coordination with the Government of an African country. Finally, Minespider has assembled a working group of two global Fortune 500 brands from the tech sector, a scientific inspection and certification company, a mine and a smelter to pilot the largest yet attempted traceability project in the tin supply chain.

Feedback to and reception of our solution has been sincerely positive throughout all three projects. The collected pilot data provided us with sufficient data to create a development plan towards TRL9 and also generated relevant technical and user-related content. Willingness to pay, price validation, and expected conversion rates were demonstrated in each particular case. Phase 1 also helped validate the business concept by demonstrating the market need for our solution as well as evaluate the prospects for European growth and international expansion, consistent with the commercialisation plans. Minespider has also undertaken several complementary actions in order to maximize its market success, by defining and implementing the communication needs (product positioning and marketing message) to be used during the commercialization phase, thereby creating the basis for successful product launch.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

Minespider addresses the needs of companies wishing or having to comply with due diligence on the minerals and other supplies they are using or handling. The EU Conflict Mineral Regulation applies directly to 600 to 1,000 EU importers and indirectly affects ~500 smelters and refiners of 3TGs and gold, based within the EU or abroad. Minespider provides them the best value for money solution to continuously perform supply chain due diligence with the following value propositions:
- Minespider captures and transmits data, often worth 5-6% of the cost of the mineral, allowing the data to be leveraged by later players in the supply chain. This is an enormous value that is currently lost.
- Allows companies to monitor their supply chain risk and assess their impact in light of the actions of their suppliers.
- Integrates the entire mineral value chain transparently, without compromising privacy and competitiveness, via the way data is encrypted and stored and the use of a single open protocol on a public blockchain
- Incentivizes the use of a single protocol, like the Internet for responsible mineral data, as opposed to individual companies making their own private protocols that do not work with each other.
- Yet, users are able to customize their own DApp to their particular needs and integrate it with the Minespider protocol - a key feature for incentivizing adoption in the industry;
- Reconfigures the cost of due diligence to fall on those who benefit from it, and not unfairly burden large and medium sized mining companies, as well as small and artisanal miners or other SMEs. This also ensures that smaller companies are not pushed out of the market by regulatory costs.
- The use of blockchain eliminates overlapping audit costs and enables secure data transfer between supply chain members who may not have trusted each other with their data.
- Minespider allows companies to incentivise, streamline and simplify the impact and risk assessment in their supply chain.

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