Vale completed this Thursday its first sale of iron ore using blockchain technology with Nanjing Iron & Steel Group International Trade Co., Ltd., a subsidiary of Nanjing Iron and Steel Co., Ltd. (NISCO) for a cargo of 176,000 tons of Brazilian Blend Fines (BRBF) from Teluk Rubiah Maritime Terminal, in Malaysia, to China. This transaction is aligned with Vale's strategy of becoming a more innovative and customer-centred company through greater integration with clients and partnering for the development of new solutions.
It is an important milestone towards the digitalisation of the sales and trade process, bringing innovation to the traditional paper-intensive trade transactions and offering a better service to the clients as well as predictability in the steel value chain.
The Letter of Credit (LC) was issued through Contour blockchain platform whilst the shipping documents and the electronic Bill of Lading were handled via essDOCS' CargoDocs solution - with all actions carried out through a single, interfaced platform consolidated in Contour. The transaction also had the support from DBS Bank Ltd and Standard Chartered Bank Malaysia Berhad.
The integrated transaction enabled end-to-end security and transparency with real time visibility of the documentation to all stakeholders, drastically reducing the amount of emails and paperwork exchanged among the parties and providing enhanced user experience through access to a single solution to execute the trade.
-
LC draft negotiation
-
No SWIFT, L/C confirmed in the platform
-
Enhance LC data management
-
Real time transparency
-
Data is Centralized and Secure
-
Reduce email exchanges
-
Amendments tracked and agreed by all Parties
-
Electronic Documents
*L/C - Letter of Credit, irrevocable financial instrument utilized to finance the purchase of goods
What is blockchain and how it works
At its core, the blockchain is an accounting software. It´s just a way to track the movement of value from point A to point B. But what sets it apart from old fashioned accounting is that there is no need of a central third party to audit the transaction and assure that everything is in the right place. A blockchain is called a blockchain because the transactions are settled in batches called blocks. All the information in the previous block of transactions is smashed down into a tiny data, called the 'hash', there is then stored in the next block linking the batches together into a chain.
But how do we know that the value has left one location to other location? How do we know that the value wasn't sent to different locations at the same time? To ensure an object has value, it´s supply must be controlled. With blockchain this is achieved throught an audit process called mining. Anyone with a computer and an internet conection can participate in this audit process by downloading a code that lets users run what is called a 'node' that seize all the transactions on the blockchain. This specialized node expands computing power to analize the blockchain and ensure its accurate. This nodes compete against each other to solve the problem and in exchange for their work they have the chance to be rewarded with the value.
To move cryptocurrency on a blockchain, you have to have what is called 'private key'. To receive money, all you need to o is share the public key and wait for the fund to role in. Every time a block of transactions is settled the funds are moved to the new location. This process takes only a few minutes.
Source: Video with Forbes specialist Michael Del Castillo
VALE S.A. 
