To fuel a transition away from paper-based trade in order to reduce costs, delays and risks of errors, four of the world’s largest mining companies – Anglo American, BHP, Rio Tinto and Vale – have published a position paper, together with BIMCO, that proposes solutions and aims to accelerate the adoption of digital technologies across the metals and mining supply chain.
The four mining companies have formed a working group, the Metals and Mining Digitalization Forum (MMDF) and, with the support of BIMCO, aim to engage all parties involved in the digitalisation of trade, from solution providers to legislators, in an initiative to break down the barriers to a digital future.
The position paper outlines the progress made so far in digitalising the metals and mining trade, highlights the barriers that MMDF members are facing in achieving full end-to-end digitalisation, and describes the significant benefits to the industries, and thereby the global economy, if trade digitalisation is achieved.
The economic benefits of trade digitalisation are unmistakable. According to a report by the International Chamber of Commerce (ICC), an estimated 4 billion trade documents are in circulation. If stacked on each other, the documents would be 520,000 metres high and constitute about half a million trees, testifying to the fact that paperless trade reduces the carbon footprint of trade.
“Manual paper-based processes are a source of cost, delay, error, inefficiency and risk. One research report shows that these inefficiencies contribute to a staggering $507 billion of working capital trapped in S&P 1500 supply chains alone,” said Grant Hunter, Director, Standards, Innovation and Research at BIMCO.
Often, legal uncertainty, interoperability of various platforms and the lack of comprehensive standards are cited by industry stakeholders as barriers and challenges that need to be resolved.
“As a working group, the MMDF aims to bring forth the next wave of digitalisation at speed, drawing on insights and synergies from all stakeholders to advocate for a conducive environment and greater adoption of digital tools,” the mining majors said in a joint statement.
Global events such as the Covid-19 pandemic and the disruption of shipping and supply chains due to lockdowns, lost paper documents and errors clearly highlight the need for change. Over the past decade, each of the founding members of the MMDF has invested in digital transformation within mining processes, operations and supply chains. At the forefront of trade digitalisation, the founding members have carried out landmark digital-first transactions.
An area of initial focus is the Electronic Bill of Lading (eBL) which is gaining traction in the iron ore trade. Based on information provided by MMDF members, and consolidated by BIMCO, MMDF members together account for around 1 billion tonnes of iron ore shipped on average per year. Between 2021 and 2022, these leading mining companies contributed to an increase in the amount of iron ore carried on eBLs by 80%, equivalent to 100 million tonnes of cargo. eBLs now account for more than 20% of their annual trade volumes for iron ore.
In March 2023, BIMCO launched its “25 by 25 pledge” where shippers commit to target moving 25% of their annual seaborne trade volume for at least one commodity on eBLs by 2025. Anglo American, BHP, Rio Tinto and Vale have all supported the pledge.
“Their signing up is a yet another testament to their resolve to digitalise the end-to-end global trade process,” Hunter said.