BEIJING, July 8 (Reuters) - China’s Nanjing Iron & Steel Co Ltd said on Wednesday it has completed its first blockchain-backed trade in iron ore after booking a $16.87 million shipment of the steelmaking ingredient from a joint venture of miner Rio Tinto.
Blockchain, a digital ledger that forms the backbone of many cryptocurrencies such as bitcoin, helps to boost efficiency and transparency.
For the past several years, commodities groups have been seeking to save time and money by using blockchain to digitalise a sector that still relies heavily on paperwork, but have come up against obstacles.
Nanjing Iron spokesperson said the steel mill has acquired 170,000 tonnes - the equivalent of one Capesize bulk carrier - of Pilbara iron ore fines and lump from Hope Downs, a joint venture between Australian miners Rio Tinto and Hancock Prospecting Pty Ltd.
The dollar-denominated transaction, supported by Singapore-based bank DBS and trade finance platform Contour, underscores the inroads being made by blockchain in the commodities sector in China, the world’s biggest iron ore consumer.
“We are seeing more and more interest from mills and miners,” said Carl Wegner, CEO of Contour, adding that the process of issuing customers with digital letters of credit (LoCs) via blockchain technology was 90% faster than obtaining paper LoCs.
Simon Farry, vice president of sales and marketing for Rio Tinto’s iron ore business, said recent paperless deals were part of the miner’s long-term strategy to push the adoption of blockchain in China and “bring the industry closer to a full cross-border digital trade future”.
Nanjing Iron & Steel, which is located in eastern China’s Jiangsu province, is also in talks with other overseas miners about further blockchain deals, the spokesman added.
Top steelmaker Baowu, the parent group of Baoshan Iron & Steel, also confirmed two similar trades with Rio Tinto and the world’s top listed miner BHP Group in the second quarter. (Reporting by Min Zhang and Tom Daly, Editing by Sherry Jacob-Phillips)