Vol 16: How Blockchain Will Transform Africa's Mining Sector.
This is the 4th post in a blog series on Blockchain Transforming Africa, so for today, I will be explaining how this technology can transform our NATURAL RESOURCES SECTOR.
Africa is home to 54 countries and has the largest and most diversified mineral deposits on earth. These minerals have in many cases, not benefit the people who inhabit these countries. The mining industry in Africa is in a problematic state, but blockchain has the potential to make many of these challenges a thing of the past.
The Democratic Republic of Congo is potentially one of the richest countries on earth, but colonialism, slavery and corruption have turned it into one of the poorest. A country blessed with abundant deposits of copper, gold, diamonds, cobalt, uranium and oil coupled with a friendly climate and rich soil to make its land fertile, however, it has been consistently rated for years as the lowest on the UN Human Development Index, where even the more fortunate still live in grinding poverty.
Few people know about, or even where Shinkolobwe is. This small mine in the southern province of Katanga, in the Democratic Republic of the Congo (DRC), played a huge part in one of the most violent and devastating events in history. When we talk about the Hiroshima and Nagasaki bombing, we never talk about Shinkolobwe, this unpopular area in Congo (DRC) was the source for nearly all of the uranium used in the Manhattan Project, where the atomic bombs dropped on Japan in 1945 were built.
At that time, nowhere in the world had as much uranium as Congo (DRC). Mines in the US and Canada were considered a “good” prospect if they could yield ore with 0.03% uranium. At Shinkolobwe, ores typically yielded 65% uranium.
However, the story of the mine at Shinkolobwe didn’t end with the bombs. It has contributed a lot to the countries economy that has shaped its political history and civil wars that was funded by other natural resources they sold to western companies, mainly in the automotive and electronics industries over the decades that followed. Even today the Shinkolobwe mine’s legacy can still be seen in the health of the communities who live near it.
Natural resources are essential structures of socio-economic systems that has shaped the well-being of humanity, the environment, and the economy. Up to the middle of the 20th century, natural resources seemed to be inexhaustible, but during the recent decades, it’s getting more and more clear that nature isn’t infinite.
The cost of illegal mining in Africa is huge. The locals and the economy of the mining communities are left in a poverty-stricken state as vast lands that could be used for agriculture are destroyed by uncontrolled and unethical mining methods. For example, the oil-producing states in Nigeria.
In Congo (DRC) and Mali, local workers are subjected to slave-like, dehumanizing conditions. The foreign exchange revenues generated by all these mining activities that could have gone to development projects is siphoned off by large foreign corporations. The only gainers are the big mining companies, their executives and local collaborators in government and the communities.
Where Blockchain Comes In
In many African countries, federal powers do not even know how much of their natural resources leave their shores, the emphasis now is to deploy solutions that can address most of the problems associated with Africa’s extractive sector and to bring about improvements.
The use of blockchain will directly address the problems with record-keeping, traceability, and management of the entire supply chain. Blockchain can be used to enforce standards that comply with international laws on the extraction, processing, marketing, and distribution of mineral resources, this is important here in Africa where the government organizations are not trustworthy. These features make blockchain adaptable as tools of audibility and accountability in the African mining sector;
They are decentralized and available to all
The records stored on the databases are immutable
The records are open to public scrutiny and validation
Blockchain technology provides a distributed monitoring system for resource management. Companies like Apple have decided not to use minerals coming from conflict zones or mining companies with underpaid labour and poor environmental standards.
According to the World Bank, there are about 1 billion people in the world, who live but doesn’t exist in any system and don’t have a valid ID to prove their existence (this might be an understated estimate). The lack of official identification documents puts rural children especially at risk of trafficking, with fake IDs being used to move them across borders.
Once trafficked, these children and minors are sold to modern slavery rings. Digital identity on the blockchain can provide a solution to curb this menace of human trafficking, making any such trafficking attempts more traceable and preventable and offering a higher chance of catching traffickers and securing data on an immutable ledger.
United Nations (UN) in partnership with World Identity Network (WIN) has taken an initiative to end child trafficking using blockchain technology. The goal is to maintain a digital database of children, which can not be tampered with or hacked into and make all children visible by providing them with an identity. In this proposed system, the digital identity of every child will be linked to the information of his parents.
Many of the challenges for how we manage natural resources and maintain ecosystem services arise because of a lack of trust and confidence in the rules governing. In the Oil and Gas sector, blockchain can be exploited to digitize transactions which represent millions of dollars worth of investments for higher security, increased transparency and greater efficiency.
The traditional process of maintaining such a record is cumbersome and is prone to forgery and other illicit activities. Such an important piece of documentation could be stored on the blockchain, which can create an immutable record of ownership, transfer and value.
Blockchain is already used to encode verifiable information about a product origin, the technology could give greater confidence to consumers and intermediaries and be sure that what they are getting was not produced by dehumanizing labour practices and that it passed through an accountable supply chain management system that can pinpoint the pathway of the minerals from point of origin to destination.
For example, A South-African mining conglomerate named De Beers has recently launched an app named Tracr built with Blockchain. The app is used to successfully track their diamonds along its supply chain, marking the first time a diamond’s journey has been digitally tracked from mine to retail.
There are a lot of different uses of blockchain and it’s nice to see how far it can go for it to be used for a lot of good causes, one of them being the environment. And with the environmental crises that we are going through, having something that almost marries technology to social impact is what we need today. Also, psychological research and awareness are needed to make people trust this technology.
Blockchain technology is not a fix-all solution to the problems in Africa’s mining sector. But the technology can form a very strong foundation on which fundamental change can occur.
Furthermore, blockchain has a great ability to instil trust and hold people accountable, these are areas the technology can be leveraged to help improve things, the more people are thinking about solving problems, leveraging technology and thinking innovatively, the better it will be for our planet. It is time to treat natural resources like key assets that nations seek to manage for the future.
Until next week, Happy Learning.
Enjoy the weekend.