BHP completed its first blockchain iron ore trade with China Baoshan Iron & Steel worth around 14 million mt on Monday.
The transaction was done via MineHub platform for June delivery and the platform process included contract terms, exchanged digital documents and provided real-time cargo visibility.
Keeping its promise
Thus, BHP had kept its promise after suggesting that it would explore using blockchain technology for future trade back in mid-May 2020.
Back then, Rio Tinto just completed its first yuan-based denominated iron ore sale to Baosteel via Contour’s blockchain technology.
However, Rio Tinto’s transaction with Baosteel was done in yuan-denominated digitized format for the letter of credit (LoC) process, reportedly worth around RMB 100 million and involved other partners of Contour such as banks like Standard Chartered and DBS.
Saving costs through digital solutions
According to BHP, the rationale of using blockchain technology and digital solution are to reduce physical documentation processes.
As the many fraud cases in the commodity trading sector and the recent pandemic scenarios pushed the industry for adoption for digital solutions to bypass countries’ lockdowns and social distancing for cost efficiency.
Going forward, many industry players may follow the trailblazing example of Rio Tinto and BHP for the adoption of digital solution in trade transactions.