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Natural resource supply chains and trade finance – a view into the future

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Natural resource supply chains and trade finance - a view into the future

In this crowded world the relationship between humanity and the earth’s natural resources has not been clean. Responsible investors and buyers lack the information they need to make the right choice about their purchases due to the many pain points in the current supply chains. How is it that a bulk cargo carrier can be loaded and cross the ocean faster than the paperwork that follows it?

In many industries, but more so in respect to natural resources, current supply chains run on systems and processes designed several hundred years ago, many of which are struggling in today’s digital age and are no longer fit for purpose. By now of course, all the parties involved, including miners, traders, banks, streamers, carriers and insurers, to name but a few, have digitised their internal processes. This has created huge internal efficiencies, but the communications layer between individual companies reverts back to the lowest common denominator: email, paper and fax.

When a commodity like copper is sold from a mine the paperwork involved is touched by 10-20 companies all having some part to play in the deal. Unlike in financial markets, in the metals and mining industry there is no trusted central party, each company involved attempts to coordinate the trade, which ends up with a lot of phone calls to each other to continuously check on the status of the transaction.

So far this industry, like many others, has opted away from centralisation and from creating a trusted central monopoly. No one wants to give up control of their systems, IT roadmap, and their data. This has been a key blocker in the past for any central party being created and it is an example of market infrastructure where many users have aligned interests but no one wants to give up their control.

By using blockchain technology the data and governance can be kept in line with the current setup in any given market, ensuring that the new market system doesn’t shift the balance of power so much as to deter or halt adoption. Each company can host a server running a private blockchain and share only the relevant information with their trading counterparts. This enables a shared view into each transaction where paperwork and emails no longer need reconciling while respecting the privacy of the individual companies in the market.

Everyone talks about cost savings and it’s true that there is a huge opportunity for cost savings by digitising interactions between corporates, both in metals and mining, and in many other sectors. That said, the real opportunity lies just beyond. Digitisation acts as an enabler. Once the data is available countless integrations can be made to automate processes, and value add services can be built upon that data and those processes.

An example of the power of digitisation is the number of apps we use in our daily lives built on digital ID (for example, logging into other services or websites with Facebook Login) and digital location (mobile / GPS / Google Maps). We now take these types of underlying data points for granted of course and most new apps are built on top of these. Now imagine the data for corporate interactions could be made available to your apps – what else could you build?

Once you have an agreement in place with the companies who own the data they can provide access to it for your app. At MineHub, along with enabling provenance from mine to market, we are exploring ways to improve access to trade finance and project finance investments. By using internal tokenization of royalty streams we can create an asset that pays the investor every time products are sold from a mine. By digitising document presentation we can enable new players to offer trade finance and make the process less painful for all involved.

The digital world that is evolving today now sits in stark contrast to the analogue reality of working in natural resource supply chains and trade finance. Blockchains are an enabler for a new form of governance creating digital market services with reduced central control. This digitisation enables paperless trade and the future services we will come to rely upon.

About Hugh Halford-Thompson and MineHub Technologies

Hugh Halford-Thompson is VP of Business Development at MineHubmanaging client engagement as well as growing the consortia.Hugh has a background in Computer Science and started his career as a software developer & architect. He has founded several technology companies includingthe Bitcoin brokerage Quickbitcoin and BTL Group, which was publicly listed on the TSXV in Toronto.

 MineHubis building the infrastructure for the digital transformation of the mining and metals industry, via coordination and collaboration between a large consortium of market participants. Partners and consortium members span across producers, trading houses, logistics providers, inspectors, smelters and carriers, including Goldcorp, Kutcho Copper, Capstone, ING Bank, Ocean Partners and Wheaton Precious Metals.The MineHub blockchain technology based solution is streamlining the metals supply chain by digitally transforming processes and providing traceability in a highly secure platform. 

https://minehub.com/

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Oil rises on positive forecasts, slow U.S. output restart

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Oil rises on positive forecasts, slow U.S. output restart 1

By Bozorgmehr Sharafedin

LONDON (Reuters) – Oil prices rose on Tuesday, underpinned by the likely easing of COVID-19 lockdowns around the world, positive economic forecasts and lower output as U.S. supplies were slow to return after a deep freeze in Texas shut down crude production.

Brent crude was up 36 cents, or 0.5%, at $65.60 a barrel by 1212 GMT, and U.S. crude rose 39 cents, or 0.6%, to $62.09 a barrel.

Both contracts rose more than $1 earlier in the session.

“Vaccine news is helping oil, as the likely removal of mobility restrictions over the coming months on the back of vaccine rollouts should further boost the oil demand and price recovery,” said UBS oil analyst Giovanni Staunovo.

Commerzbank analyst Eugen Weinberg said optimistic oil price forecasts issued by leading U.S. brokers had also contributed to the latest upswing in prices.

Goldman Sachs expects Brent prices to reach $70 per barrel in the second quarter from the $60 it predicted previously, and $75 in the third quarter from $65 forecast earlier.

Morgan Stanley expects Brent crude to climb to $70 in the third quarter.

“New COVID-19 cases are falling fast globally, mobility statistics are bottoming out and are starting to improve, and in non-OECD countries, refineries are already running as hard as before COVID-19,” Morgan Stanley said in a note.

Bank of America said Brent prices could temporarily spike to $70 per barrel in the second quarter.

Disruptions in Texas caused by last week’s winter storm also supported oil prices. Some U.S. shale producers forecast lower oil output in the first quarter.

Stockpiles of U.S. crude oil and refined products likely declined last week, a preliminary Reuters poll showed on Monday.

A weaker dollar also provided some support to oil as crude prices tend to move inversely to the U.S. currency.

(Reporting by Bozorgmehr Sharafedin in London, additional reporting by Jessica Jaganathan in Singapore; editing by David Evans and John Stonestreet)

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UK-Japan trade deal settled nerves for Japanese firms, Honda executive says

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UK-Japan trade deal settled nerves for Japanese firms, Honda executive says 2

LONDON (Reuters) – Britain’s trade deal with Japan settled the nerves of a lot of Japanese businesses in the United Kingdom and gives them confidence about their future prospects there, a senior Honda executive said on Tuesday.

Japan, the world’s third-largest economy, has since the 1980s made the United Kingdom its favoured European destination for investment, with the likes of Nissan, Toyota and Honda using the country as a launchpad into Europe.

But Britain’s shock 2016 decision to leave the European Union had prompted Japan to express unusually strong public concerns. Their companies and investors warned that a disorderly exit from the EU would force them to rethink their four-decade bet on Britain.

“We welcome very much the Japanese trade agreement which as a Japanese businesses was very welcomed,” Ian Howells, senior vice president at Honda Motor Europe, told a parliamentary committee.

“On the point around confidence, that certainly amongst my peers in Japanese companies was very much welcomed, and probably settled a lot of nerves in terms of their trading prospects in the UK going forward.”

Britain and Japan formally signed a trade agreement in October, marking Britain’s first big post-Brexit deal on trade. It has also made a formal request to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which Japan is also a member.

(Reporting by Kate Holton)

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UK retailers see sharp fall in sales and mounting job losses, CBI says

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UK retailers see sharp fall in sales and mounting job losses, CBI says 3

LONDON (Reuters) – British retail sales fell in the year to February as stores cut jobs at a rapid rate, with only supermarkets reporting any growth during the latest COVID-19 lockdown, a survey showed on Thursday.

The Confederation of British Industry’s gauge of retail sales stood at -45, up only slightly from January’s eight-month low of -50. The measure points to falling sales and is below the consensus forecast of -38 in a Reuters poll of economists.

Retailers’ expectations for March – when non-essential shops will remain closed to the public as part of lockdown measures – fell to -62, the lowest since the series began in 1983.

In another sign of a changing consumer habits during lockdown, the survey’s gauge of internet retail sales hit a new record high.

“With lockdown measures still in place, trading conditions remain extremely difficult for retailers,” said Ben Jones, principal economist at the CBI.

“Record growth in internet shopping suggests that retailers’ investments in on-line platforms and click-and-collect services may be paying off, but the re-opening of the sector can’t come soon enough to protect jobs and breathe life back into the sector.”

Job losses among retailers accelerated according to a quarterly question in the survey. For the distribution sector as a whole, which includes wholesalers and car dealers, employment fell at a record rate, the CBI survey showed.

(Reporting by Andy Bruce, editing by David Milliken)

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