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Blockchain-based iron ore platform MineHub publishes first transaction

  • Tuesday, June 30, 2020
  • Source:ferro-alloys.com

  • Keywords:MineHub
[Fellow]Blockchain-based iron ore platform MineHub publishes first transaction

[ferro-alloys.com]Miner BHP and China Baowu Steel Group, the world's largest steel producer, have completed a first iron ore trade on MineHub, a new blockchain-based trading platform, in what promises to be a further step in the move towards the so-called financialization of iron ore.

This is the first published transaction on MineHub, a platform spokesman said June 29. The digital platform expects further transactions to occur in iron ore and other markets over the next few months. "We have been testing in several markets, and are for instance piloting with a copper mine but have not yet completed trial phase," the spokesman said.

Based on IBM blockchain technology, MineHub is working together with banks and miners including ABN-Amro, ING, Wheaton Precious Metals Corp and Capstone Mining Corp to develop its services. It aims to connect buyers, sellers and service providers in mining and metals supply chains through shared information, on a common but decentralized digital platform, allowing parties to virtually integrate trade operations processes like contracting, logistics, specifications and financing services.

The platform focuses on operational processes in the post-trade domain, using high quality data and real-time supply chain visibility, which in turn enables companies to optimize production, logistics and capital use, according to the spokesman.

MineHub may represent a "baby step" towards financialization and towards creating digital versions reflecting iron ore assets, the platform's spokesman said. "The financialization will be up to the markets, is subject to many other variables not just digital feasibility. We will focus on making it faster, better and cheaper for the buyer and seller to deliver or receive the iron ore and settle for it."

Investors' 'safe haven'

Iron ore has come to be regarded as a "safe haven" for investors, as supply side issues following Vale's January 2019 tailings dam accident have led prices for the steelmaking ingredient to keep near five-year highs for much of the past year. This has coincided with a growing trend for steelmakers to seek higher-quality ore that will help reduce the amount of metallurgical coal needed in their blast furnaces, thus reducing emissions. Demand for niche qualities has led to a decommoditization of iron ore trading, leading to new opportunities for specialized exchange-based trading.

Iron ore spot markets came to the fore in 2010 after the traditional iron ore annual "benchmark" system of contract negotiations between buyer and seller collapsed following the global economic crisis, bringing new exchange trading opportunities amid increased market volatility. Iron ore trades have boomed in recent times on China's Dalian Exchange, the Singapore Exchange SGX – both increasingly popular with financial players - and globalORE, a digital marketplace for physical ore trading.

A new physical trading platform for iron ore in China, the HBIS International Ore Supermarket, was launched on June 22 by Heibei Iron and Steel Group, and concluded seven trades on the first day, with the distinguishing feature that it may open bids to all companies registered with the exchange, rather than selected counterparties as may be the case on other exchanges. The Supermarket runs in parallel with the existing COREX physical iron ore trading platform, on the COREX website.

MineHub's CEO Arnoud Star Busmann was cited as saying that "innovative work is underway in base metals concentrates, structured finance and emissions tracking to further prove the value that can be created through digitalization....We will incorporate these learnings into the next MineHub release, planned for Q4 2020."

(S&P Global Platts)

  • [Editor:王可]

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