Blockchain platform MineHub has notched up the first live metals financing transaction using its trade finance application.
Launched last month, MineHub Trade Finance connects borrowers to their financiers via a secure communication channel, giving them access to the real-time data set of each transaction. In this way, financiers get a direct line of sight to the relevant events, developments, collateral and assets they are financing.
In this first transaction, alternative financier Kimura Capital financed three consecutive shipments of silver concentrate from Peru to China for its client PY Commodities, a trading and agency company specialising in offering services to Chinese smelters involved in the non-ferrous industry.
“When our financing partner Kimura Capital introduced us to MineHub, we were impressed with the platform’s potential and its readiness for our Chinese market,” says Henry Proctor, managing director at PY Commodities, adding that the company now intends to embed the platform into its day-to-day operations.
Launched in 2019, the MineHub platform focuses on trade operations and document flows between metals and mining companies. It 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.
By adding in a trade finance functionality, the platform is attempting to mitigate some of the impact of the recent flight to quality in commodity finance in the wake of numerous fraud cases, giving financiers visibility into the transactions they are financing, such that the incentive and opportunity for fraud is dramatically reduced.
Speaking to GTR recently, Arnoud Star Busmann, MineHub CEO, said: “We are reducing some of the risks of these transactions for creditors, and this should lead to improved access to capital for SME traders and companies.”
“Demand for trade finance solutions is increasing while many commodity banks are exiting the sector, and traders are busting their credit limits with the banks that are still there,” says Kristofer Tremaine, founder and CIO at Kimura. “We have tremendous opportunities for growing our book but need to be smart about it. Digitalisation and blockchain-based transparency are of fundamental importance to our ability to grow our asset base faster than our headcount whilst reducing risk.” He adds that Kimura has started to deploy the MineHub solution across its portfolio of borrowers and commodities.
MineHub says that it is now rolling out its platform and the trade finance application to more corporates and liquidity providers.