BHP Group and China Baowu have completed their first iron ore trade on MineHub’s blockchain-based platform.

Launched in October last year, the MineHub platform allows parties involved in selling, buying, delivering and paying for a cargo of minerals to collaborate securely in real-time, sharing electronic information rather than couriering or emailing documents that are subject to interception, fraud and cyber threats.

The transaction saw BHP deliver US$14mn of iron ore to China Baowu, a state-owned iron and steel company, with trade confirmation, logistics, assay exchange, notifications and document sharing all carried out via MineHub.

Unlike the recent transaction between China Baowu’s listed arm, Baosteel, and Rio Tinto, which saw both sides carry out the first paperless renminbi (Rmb)-denominated deal in the iron ore industry with the purchase of Rmb100mn of iron ore from Rio Tinto over the Contour blockchain trade finance network, this process did not include a financing element.

A MineHub spokesperson tells GTR that this transaction was a “first step”, with the trade completed on the platform in parallel with the regular, paper-based process. “We focus on the trade operations and the paper flows between the companies. Financial instruments and payments will come in a later stage,” they add.

MineHub says that the Baowu-BHP deal is the first of many transactions it intends to carry out with various industry partners, with the eventual aim being to provide commodity supply chains with a fully digital end-to-end fulfilment process.

“This series of transactions, each focusing on different aspects of the post-trade process, will allow MineHub to incrementally expand the platform’s functionality and scalability into the iron ore and other mineral commodity markets, incorporating real-life user experience,” says Arnoud Star Busmann, the company’s CEO.

The next MineHub release is planned for Q4 2020, which Star Busmann says will “start to provide a solution to the increasingly urgent need for industry-wide digitalisation, by boosting safety, transparency and resilience of critical supply chains”.

This comes as banks become increasingly jittery about financing the Asian commodity industry amid a string of high-profile company collapses and allegations of fraud. The recent downfall of Singapore fuel traders Hin Leong and ZenRock brought to light alleged dishonest practices, including duplicate financing of invoices. This, in turn, had echoes of the accusations of “massive, premeditated and systematic” documentary fraud by commodity trader Agritrade earlier this year.

By providing an immutable record of transactions, MineHub – which has set up a consortium with firms across the mining supply chain, including ING, Wheaton Precious Metals, Ocean Partners USA, Kutcho Copper, Capstone Mining and law firm White & Case – says it can enable its members to streamline operations, improve key process efficiencies, and bring a new level of trust and transparency to the industry.