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Blockchain Delivers Transparency to Uranium Markets

To explore the capabilities of blockchain in uranium and energy trading, major uranium producer Uranium One and distributed ledger technology (DLT) startup Insolar partnered.

In addition to that, the team-up will focus on the development of the production and distribution of uranium. And this is because of multi-party deals in the industry that they still conduct using paper and pencil with non-standard contracts that cross borders and need tedious legal review.

The Uranium One and Insolar both think that the integration of blockchain into uranium producer’s internal process might make uranium supply chains more transparent. Also, Uranium One expects that blockchain will improve security, compliance, and reliability in the sector.

Then, Insolar stated that the parties are talking about a pilot program for the project. And they wish to launch the pilot later this year. However, it might take over a year for the full launch of the said project.

 

Over-The-Counter Markets

Moreover, Insolar will further research blockchain applications in non-exchange-traded commodities markets like iron ore. The firm projects that its DLT-based platform might cut the over-the-counter (OTC) deal cycle from months to weeks and cuts transaction costs by 40% or billions of dollars a year.

Aside from that, the Global OTC market trading volume is purportedly over $380 billion per year. Then, Insolar estimates that they currently spent up to 3% of that on overhead and other transaction-related costs.

Insolar stated, “In trading of over-the-counter commodities such as uranium, the contracts and negotiating process is extremely complex involving at least six parties (the miner, the converter, the power generation customer, and their respective banks).”

According to Insolar, this indicates that considerable resources to negotiate and sign contracts. And Insolar estimates that it might cost up to $50,000 per deal.

With the implementation of blockchain in the OTC markets, Insolar plans to resolve two major problems the sector faces. First, the transaction is slow and pricey, involving multiple participants, which ostensibly results in scattered communication and various reconciliations among involved parties.

Second, the other problem lies in the lack of a transparent pricing mechanism, as third-party agencies quote most pricing. Insolar said that there is no guarantee in the accuracy and completeness of the input data; in fact, it is a block box in a lot of markets.

Also, the sector really needs a system that can collect transaction data from every participant and give spot and forecast prices without exposing the information of all transactions.

 

Mineral Supply Chains

Meanwhile, other industry players also explored blockchain’s capabilities to chop off third parties. Additionally, saving both money and time on deals in the minerals trading sector. Recently, IBM and metals and mining industry-focused blockchain firm MineHub have teamed up. And together, they will develop a blockchain-based solution to streamline supply chain management in the mining and metals industry.

Also, they will digitize the supply chain with the use of the creation of ledger shared between permissioned participants. As a result, both firms can ensure an aggregated, real-time view of transactions and data flow throughout the supply chain.

Elsewhere, blockchain-based digital trading platform Tradewind Markets also launched a digital tool. And it provides supply chain provenance to buyers and sellers of precious metals last November.



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