Introduction
Mining corporations across the globe are attesting to digital transformation for benefits including enhanced productivity, safer operations, and operational gains (Young & Rogers, 2019). Blockchain is essentially a digital database that resembles a massive spreadsheet or ledger. All new data, including transactions, is time-stamped and saved in blocks that are linked to one another to create a sequential “chain.” The inefficiencies of manual and paper-based processes that have hampered performance have long plagued the mining and metals industry. The industry has been forced to adopt blockchain technology to address these difficulties by the requirement for transparency and stronger Environmental, social and governance (ESG) compliance regulations (Reyna et al., 2018). The use of blockchain technology allows mining companies to control certain fundamental aspects of their activities. These include aspects such as water consumption, CO2 emissions, any human rights violations and efficient financial management (Onifade et al., 2024). This article explores the innovative aspects that blockchain brings to the extractive industries.
The blockchain principles
Blockchain technology is driven by principles of verification allowing transactions to be initiated independently, grouped and verified before being added into blocks of chains which is validated through consensus of nodes before utilisation (Tan & Salo, 2023). Blockchain is now used in several fields around the world, and the mining industry is no exception. The overall operation of an open-pit or underground mine involves the commissioning of several pieces of equipment in the supply chain. The continuous and intense activities of this chain are considered by the principles and platforms of blockchain. As a technique which gives room for real-time transactional data storage, verification and validation for the purpose of eliminating the middle parties such as financial institutions dependence; blockchain relevance in mining industry cannot be downplayed (Onifade et al., 2024).
Blockchain technology is driven by three major principles; the principle of cryptography, decentralisation and consensus.
Cryptography
Cryptography is one of the fundamental pillars on which blockchain technology is based. It enables the network to operate continuously, guarantees the consent mechanisms between users and the integrity of the blockchain.
This technique emphasises information safety and protection. Security of information is crucial to technology usage in every sector including the mineral industry. The sensitive nature of blockchain attracts more attention using extra-advance security algorithms and mechanism to secure all forms of transactional activities within the blockchain. Cryptography buttresses the need for confidentiality, integrity, non-repudiation and authentication in information sharing (Zhang, 2023). This ensures transparency of data and information within the global network. The information stored are connected in a block with encryption methodologies (Symmetric Encryption and Asymmetric Encryption). It uses a very strict tracking mechanism which cannot be deleted or modified without the usage of a key. The collection of record mostly financial records are linked with each other have strong resistance to alteration and protected using either a public key, a private key or even a combination of both (Wang, 2021). Cryptography is a safe and secure transaction method that protects sensitive and strategic information.
Decentralization
In blockchain, control and making of decisions from an individual or group into the network of events is referred to as decentralisation. This encourages clarity and improve trust within the stakeholders of this technology. This technique also deters participants from applying authority and control over other members of the blockchain network so as to preserve the functionality of the network (Pincheira et al., 2022). Decentralization reduces the level of trust that members of the chain must have in each other. The aim here is to prevent one of the members from having influence over the others, which would degrade the functioning of the network. This is a fundamental principle that enables the various departments of the mining company concerned to operate almost autonomously.
Consensus
Based on immutability, blockchain transactional values cannot be altered or changed not even by participants once it is recorded and shared to the ledger. In the principle of consensus, for blocks to be accepted into the chain; the nodes must reach a consensus just like proof of state and other methodologies (Mermer et al., 2018). A consensus mechanism enables the network to operate securely and establish a unified version of truth across the blockchain. In simple terms, when a member of the network (node) initiates a new transaction, it is broadcast to the entire network. Each node maintains a record of the blockchain’s transaction history. To ensure that every node has an identical version of this history, each new transaction must be verified. The network nodes collectively validate each transaction before it can be approved and added as a new block in the blockchain. This process of validation is facilitated by what is known as a consensus mechanism.
The benefits of blockchain technology in mining
The inefficiencies of manual and paper-based processes that have hampered performance have long plagued the mining and metals industry. The industry has been forced to adopt blockchain technology to address these difficulties by the requirement for transparency and stronger Environmental, social and governance (ESG) compliance regulations (Reyna et al., 2018). As mentioned above, several companies are now using blockchain technology in their processes. The use of blockchain technology is already very common. With the help of disruptive innovation, organisations across all industries are finding new and exciting chances to develop and provide clients attractive services (Lu et al., 2019). The consistent desire of mining companies to increase their output and save time can therefore use blockchain as a tool to help them on several levels.
Human resources management
Maintaining employee motivation is another responsibility of human resources, along with maintaining and safeguarding corporate and personal information at scale. Human resources is constantly in favour of new technology that makes it possible to manage employee-related chores better. Blockchain is a quicker, more effective way to (i) verify and upkeep the credentials of job prospects, a system that could save money and time by checking the candidates’ training, credentials, work history, or talents; and (ii) Reduce the complexity and cost of international payroll to enable more efficient and timely cross-border payments to multinational employees; and Controlling employee incentives such as insurance and settlements (Onifade et al., 2024).
Engineering, construction and handover of the mine site
Complex spatial and engineering information is produced in both organised and unstructured formats by the Engineering, Construction and Handover (ECH) business operations. Costs rise due to the management and upkeep of this vast amount of information. This additional expense may cause the business run-rate and corporate goals to be delayed if it is not properly and promptly accounted for. Blockchain ensures trust and productivity compliance by making transactions traceable during the difficult processes of monitoring rules and standards (Ali et al., 2019).
Electronic identification
Mine operations must include security as a key component. It is intended to defend against hostile activities the company’s reputation, employees’ safety, equipment assets, and real estate, with people as the main assets. It makes sense considering that most mines require successful completion of a thorough background check for all prospective workers and contractors. Mining for precious minerals involves many layers of physical and technological security measures, including constant surveillance, regulated access to high-security zones, and more (Ali et al., 2019). It is important to note that mine safety challenges are numerous and depend on the region. Fortunately, today’s machines can be controlled remotely. What’s more, the Internet of Things makes it possible to solve certain even more complex problems.
Sustainability
Thorough end-to-end tracking of ores and minerals can be created using blockchain technology. The procedure calls for stamping sealed bags or containers of concentrates and ore with a special identification number that will later be recorded on the blockchain. The identification number will be continuously updated with an ongoing timeline tracking and documenting movements, as well as information on the quality and quantity of each parcel of ore or concentrate. This will have two immediate applications: first, it will give clients confidence while moving valuable minerals, and second, it will make it easier to verify that the minerals being bought come from conflict- and law-abiding locations (Onifade et al., 2024).
Limitations of blockchain
Despite all its advantages, blockchain does have a few limitations. Of course, this does not take away any of its qualities. The fact that blockchain technology cannot replace industrial standards like quality control systems, procedures, and other related physical processing needs is one of the major disadvantages that must be taken into account (Zwitter & Boisse-Despiaux, 2018).
A decentralised blockchain is open to the public, the data it contains is freely available, and anybody can join and conduct transactions, while a centralised blockchain is not always open to the public and is frequently managed by a single institution that has the authority to regulate access and usage. Although it is clear that a decentralised blockchain is more secure, the data being publicly available has a cost. As a result, it is likely to bring up data protection issues that may necessitate the need to redact sensitive information. Depending on the volume and frequency of transactions, data redaction could require a significant amount of work, potentially driving up the cost of a good implementation. Additionally, there may be business-related concerns because some of the larger participants and stakeholders may not want transaction data to be freely accessible to rivals and publicly available (Onifade et al., 2024).
When actors accountable for sustainable management of mineral supply chains talk about the advantages of using blockchain-enabled traceability systems, they keep a high level of ambiguity about the technology itself. They rely on the inherent ambiguity of terms like ‘sustainability’, ‘social responsibility’, ‘transparency’, and ‘traceability’ to speak to a variety of audiences who might not have otherwise come together around a particular cause (Calvão & Archer, 2021).
Conclusion
Blockchain technology is a transformative tool that addresses key challenges in the mining industry, such as inefficiency, lack of transparency, and ESG compliance. By leveraging principles of cryptography, decentralization, and consensus, it ensures secure, immutable, and trustworthy data management across operations. From human resource management to engineering, construction, and ore traceability, blockchain enhances productivity, reduces costs, and fosters sustainability. Moreover, it strengthens confidence among stakeholders by enabling end-to-end tracking and compliance with ethical sourcing standards.
However, blockchain is not without limitations, such as its inability to replace traditional quality controls and potential data privacy concerns in decentralized networks. Despite these challenges, its potential to drive innovation, transparency, and accountability makes it an invaluable asset to the mining sector. As the industry evolves, integrating blockchain with existing systems will be key to achieving long-term operational efficiency and sustainable growth.
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