Blockchain platform MineHub is further branching out into the financial aspect of the metals and mining supply chain, with the formation of a joint venture with asset management firm Kimura Capital.
Under the joint venture, the two sides will collaborate on the launch of the Syndication Application, a standalone platform that will enable investors to syndicate their capital to provide sustainable trade finance to commodity supply chains.
MineHub will develop the application and provide it with its technology under license – including the underlying technology for its ESG solution, which it released in late 2021. The MineHub ESG solution, which went live in December, allows metals and mining companies to capture and administer the ESG credentials of their brands and products, request and record third-party certification of this information, and then have this certified data automatically included into the transaction datasets related to the sale, purchase or financing of their products.
The joint venture application will also leverage MineHub Trade Finance. Launched in November last year, the solution 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.
“The borrower invites their lender to the transaction, then they share documents and give the lender access to those parts of the transaction that the lender wants to see as part of the credit requirement,” Arnoud Star Busmann, CEO at MineHub, told GTR at the time. “That might be for instance the contract with the supplier or the buyer, or it might be the logistics around seeing where the vessel is; it is selective at quite a granular level.”
The origin and provenance of data and documents are recorded in an immutable audit trail secured by blockchain technology. Users can verify the authenticity of key documents like inspection reports, invoices and warehouse receipts, and improve control over key risk events like collateral releases and assignments.
On the Kimura-backed Syndication Platform, the tech MineHub has developed thus far will be used to match the credit risk attributes and ESG credentials of qualifying transactions with the pre-defined investment criteria of qualified investors, as well as coordinate the pooling of their capital commitments into a joint financing of the underlying transactions.
MineHub says that the risk and ESG compliance of the transactions will be underwritten by specialist originators, who will also coordinate the funding, disbursement and repayments.
Kimura will be the first originator and will bring its expertise, licensing and network of customers and co-financiers to jumpstart the liquidity on the platform, however the venture’s operations will be fully segregated from Kimura’s regular business, enforced by the privacy guarantees of the underlying blockchain technology.
“In a sense, it will be a marketplace for investors to meet with assets and borrowers, and syndicate their risk appetite quickly to meet the financing needs. Because MineHub enables the capture and tagging of the ESG credentials to transactions, borrowers and assets, it provides clarity and certainty to financiers with sustainable investment mandates that their funds are allocated in line with their investment criteria from an environmental, social and governance perspective,” Heike Truol, chief commercial officer at MineHub, tells GTR.
MineHub and Kimura say that this syndication of capital will increase the volume and size of the qualifying transactions that can be financed, and as such provide working capital into supply chains, including those that contribute to raising ESG standards.
“This syndication platform offers a systematic and transparent mechanism to bring more financiers into trade, particularly those who want to use trade finance as an asset class but don’t have the expertise or access to it,” Jessica Craven, head of responsible investment at Kimura Capital, tells GTR.
This is the latest expansion in scope for MineHub, which originally started life in 2019 as a means to tackle inefficiencies in metals and mining supply chains. The first iteration of the MineHub platform was aimed at taking paper out of the process, allowing 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 paper documents that are subject to interception, fraud and cyber threats.
Since then, the company has been turning its sights to linking the financial and physical supply chains, connecting buyers, sellers and their banks via a partnership with trade finance network Contour, as well as notching up the first live metals financing transaction on its own network with Kimura.