In its first time, the Chinese steelmaker, Nanjing Iron and Steel Company, said it has completed an iron ore business using blockchain technology.
The steel company obtained a shipment valued at US$16.87 million of steel-making ingredients from the joint venture between the multinational mining group, Rio Tinto and Hancock Prospecting Pty. The shipment included 170,000 tonnes of Australian iron ore fines and lump.
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According to Reuters, the dollar-denominated transaction was supported by Singapore-based DBS Bank and the Contour trade finance platform.
This marks another blockchain-based trade deal by the world’s second largest mining group, Rio Tinto. In May, China Baowu Steel Group also sealed a Yuan-denominated purchase with the mining giant.
Digitizing the metal trade
Blockchain technology is widely recognized for its potential to digitize trade finance and reduce outdated manual paperwork. Rio Tinto’s vice president of sales and marketing, Simon Farry, said his push for paperless deals with blockchain technology is part of the company’s long-term plan for blockchain adoption. In doing so, he aims to bring the mining industry closer to cross-border digital commerce in the future.
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Contour CEO Carl Wegner said they are seeing increased interest from mills and miners in blockchain technology. He added that the use of this technology has made processes such as issuing letters of credit 90 percent faster.
Blockchain in trade finance
Commercial financing is also experiencing greater disruption in its processes through blockchain technology. In June, İşbank became the first Turkish bank to establish an international trade finance agreement on distributed accounting technology.
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In early May, the People’s Bank of China (PBC), together with other government agencies, proposed a blockcha-in-based trade finance platform.
The world’s largest mining company, BHP, also recently sealed a $14 million iron ore deal with the world’s largest steel producer, Baosteel.