The mineral mining industry in Africa is beset with problems and blockchain has the potential to make many of these challenges a thing of the past. Africa is home to 54 countries and has the largest and most diversified mineral deposits on earth. These minerals have in many cases, not benefitted the people who inhabit these African nations.
The impact of the blockchain, otherwise known as the Distributed ledger technologies (DLT), involves the setting up of digitally stored databases around several privately held locations around the globe, enabling the creation of electronic records which can be verified using peer-to-peer mechanisms, without any verifying party having centralized control of the database. Such a record is secure, accessible to all, and is immutable.
The very structure of the blockchain makes it suitable for use in eliminating the various challenges that have beset the mining industry in Africa, which is riddled with problems that are created from the relative opacity of all segments of the sector. Take any person living in a typical African mining community and ask whether he or she knows what happens to the minerals taken from their soil and you would be lucky to get an informed answer.
The opacity of the processes involved from the extraction point to when the precious minerals and the payments change hands provides the perfect cover for those who game the system at all levels.
In many African countries, national governments do not even know how much of their minerals leave their shores. Such is the level of decadence in the mineral sector in Africa.
The situations above generally occur where there are legitimate governments in place. When there are conflict situations or conditions where renegade movements are in control of the areas where the mineral resources are located, things take a gory turn. The problems of conflict minerals which the film “Blood Diamonds” portrayed in a toned down manner are now well known.
The use of Blockchain in the mining industry in Africa has the ability to address some, if not all the problems associated with the extractive industry and to bring about improvements in both efficiency, security and the reduction in corruption and criminal activities. The use of distributed ledger technology will directly address the problems with record-keeping, traceability, and management of the entire supply chain. The blockchain can be used to enforce standards that comply with international conventions on the extraction, processing, marketing, and distribution of mineral resources, and nowhere is this more important than in the beleaguered mining industry in Africa.
Issues surrounding the mining industry in Africa.
The political, economic and social cost of illegal mining industry in Africa is immense. From Ghana to DR Congo, Nigeria to South Africa, the story is the same. The locals and the economy of the mining communities are left impoverished as vast lands that could be used for agriculture are destroyed by uncontrolled and unethical mining methods.
There are numerous reports of local workers being subjected to slave-like, dehumanizing conditions, overseen by armed guards paid for by large international companies. The countries bleed foreign exchange, as revenues that could have gone to development projects are siphoned off by large foreign corporations. The only gainers in the region, therefore, are the big mining companies in Africa, and their executives and local collaborators in government and the communities.