Gold is a lucrative commodity, and its value only appears to be on the rise. Yet there’s a problem in the gold industry, and that’s illegal and unethical mining.
Supply chains are convoluted and difficult to track. Blockchain technology is often lauded for its potential in supply chain management. But could blockchain technology be, in fact, a new avenue to ‘clean gold’? Is it possible to truly ensure that the gold we purchase is not mined in unethical, conflict-based or unsustainable operations?
What’s the problem with gold?
Gold, like many other metals, is often mined in conflict conditions. It’s one of the 3TGS (that’s Tin, Tantalum, Tungsten and Gold) and is often implicated with commonly mined conflict minerals such as cobalt. Much of this mining occurs in the DRC, where artisanal mines with poor conditions that fund conflict are prevalent.
Mining companies often don’t want conflict minerals in their supply chains. However, the widespread nature of illegal mined materials is a seemingly impossible problem – and it’s one that many companies do not have an answer to.
Even when the gold comes officially from a responsible source, gold may be sourced by employees or intermediaries from other, less ethical sources.
Previously, companies have attempted to tokenize gold with blockchain technology. Yet the real opportunity for blockchain in gold is tracking its responsible sourcing, from mine to vault. Blockchain’s decentralised and immutable nature makes it ideal for traceability and transparency in gold mining.
Improved conditions through gold tracking
While those who run the mines gain lucrative profit, those who work to mine the gold are often subjected to inhumane, unethical conditions. In a responsible mining operation, workers are paid a reasonable wage, their safety is respected and considered, and their communities are funded and grown, as opposed to left to survive once the operation is over.
All gold sourcing needs to be responsibly tracked so that conflict operations are forced to comply or excluded from supplying gold.
Potentially, this will create a global bullion market where all gold is clean gold.
This would also reduce the extra cost for companies to source ‘clean gold’. Currently, sourcing Fairtrade or Fairmined gold is a large financial burden on companies, and this in some cases is passed onto the consumer. In a global economy where clean gold is the only traded gold, this effort and cost can be decreased.
At Blockhead, we’ve created STAMP Supply – a blockchain-enabled platform that is designed to ensure traceability in supply chains. It can track anything, from gold to assets such as fuel. It ensures ethical and sustainable compliance, as well as verifying that it meets other quality and quantity standards.