ABGM’s Principal Mining Engineer William Gillespie explains the blockchain technology in simple terms

Mr. Bill Gillespie has over 50 years of comprehensive operational mining and planning experience. He commenced his career with British Coal in Scottish Division and later went to the Zambian Copper belt where he held senior positions, both technical and operational, in surface and underground copper/cobalt mines. Bill moved to South Africa with McAlpine Mining & Civils as Manager Mining. Gencor seconded Bill to their Australian business unit as Manager Coal Development. He subsequently became General Manager Billiton, Australasia region responsible for exploration, acquisitions and business development after Gencor’s reverse takeover of Billiton.

What is blockchain?

As per GlobalData (2018) blockchain is a technology implemented to simplify daily operations of companies, this technology is also referred to as “distributed ledger technology” (DLT). It is the digital technology behind bitcoin. There are three blockchain major aspects that qualifies it to be of high purpose to the mining industry: security, immutability, and accountability.

How does Blockchain work in mining industry?

In this 21st century, security has turned out to be one of the real worries for major businesses like mining. Between 2010 and 2016 about 22 mining companies suffered cyber-attacks and as to this reason they would spend so much on securing their products, according to Softpedia news (2016).


Let’s talk about the challenges all industries face this day, data security and management. Most companies tend to spend so much money buying and installing servers for this reason. On daily basis companies asks these questions:

  • How in daily works can we manage huge amount of data?
  • How can this data be access and updated live?
  • How can it be secured from hackers?

Blockchain technology is one of the best technologies that can effectively answer all these questions (Abbaspour H. 2018).

Mining companies will gradually utilize blockchain technology in order to constructively manage and trace the extraction, processing and marketing of their mineral deposits. This technology will improve confidence in the mining industry and further develop trust with outside agencies such as clients and governmental authorities. It will also allow authorized participants to access relevant information from the DLT (GlobalData, 2018).

Clients are always extremely interested in the authenticity and the development process of the product they are purchasing and be able to verify its genuineness. Blockchain provides a platform that allows seller to share details about their final products and it also boosts the confidence of the buyer to supplier.

The mining industry involves multiple processes from prospecting to the final sales product and eventual closure of the operational business. This requires broad studies from defining the resource, designing the mining requirements, engineering the required facilities with construction, operating, reclamation and closure to follow.

All these activities will require extensive documentation. Implementation of a blockchain platform would help mining companies, such that they focus on strategy, operating efficiency and overall profitability of the enterprise. It could further aid companies to effectively monitor reserves, resources, production and stockpiles. This would simplify somewhat the process of auditing the business on an ongoing basis. In this way, mining companies can enhance their visibility and engender trust within the marketplace.

What is the future?

We are living in the Information Age now, on which mining is going digital. Blockchain is the perfect innovation mining industry requires to achieve these. While blockchain in the mining industry appears to be an ineffective concept, many are considering it the future of mining.

Though the sector is still far from agile, it is embracing innovation, largely in the form of new technologies. Process automation and big data, which many predicted would be gradually introduced, have arrived with a bang and are now verging on common practice for new mines.

In recent conferences, Barrick Chief Innovation Officer Michelle Ash has been discussing what the digital mine will look like. One of the possible scenarios presented did not involve digging the ore at all and identifying the value in the ground. This is where Blockchain was seen to be the answer (Cosgrove l. 2019).

Advantages of Blockchain:

For ages mining industry has been one of the targets for cyber attacking. In addition, it is dealing with a complex supply chain. As explained by Chris C. (2018) blockchain removes a third party and by doing so it reduces the exposure of data to hackers. Blockchain records and encrypts all transaction information.

Blockchain works in a way that it decentralizes its database to every participant in the network, in a system that ensures that for every change taking place the database is automatically updated (GlobalData, 2018).

Personally, I think the advantages of blockchain are;

  • security,
  • efficient processes,
  • value cycle optimization,
  • big data computing,
  • suitable processes and
  • sharing

Challenges in using Blockchain Technology in South Africa:

Innovations and technology advancing sounds like a great idea but for developing countries like South Africa it will come at a cost. Kopp, et. al, (2018) mentioned on their research study that the power consumption of the mining process in the blockchain alone is estimated to be at least as high as the electricity consumption of Ireland which constitutes a serious liability to the widespread adoption of blockchain technology.

Economist Nouriel Roubini has written: “As for the underlying blockchain technology, there are still massive obstacles standing in its way, even if it has more potential than cryptocurrencies.” He further mentions the reasons to lack blockchain faith;

  • blockchains use excessive energy
  • blockchain is not a huge distributed computing system
  • mining does not provide network security
  • blockchain entries do not last forever or are not immutable
  • scalability remains blockchain’s weakness
  • blockchain is not indestructible
  • the anonymous/open character of blockchains is not an asset
  • proof of work is overkill
  • blockchain can breed complexity
  • blockchains can be horribly inefficient.


BRETT, C. Blockchain disadvantages: 10 possible reasons not to enthuse. enterprise times. 2018.

CALAM, C. Can Blockchain Technology save the Mining Industry from Cyber Threats? (https://www.thermofisher.com/blog/author/chris-calamthermofisher-com/). February 2018.

CIMPANU, C. A comprehensive report published yesterday by security firm Trend Micro revealed that threat groups are intensifying their efforts against companies activating in the mining sector. Softpedia News. 2018.

COSGROVE, L. How will Blockchain technology change the mining industry? Wipro. February 2019.

ABBASPOUR H. Potential benefits of blockchain technology for mining industry: with a case study of truck dispatching system in open pit mines. Institute for mining and special civil engineering, TU Bergakademie Freiberg, Germany. June 2018.

KOPP, H., KARGL, F., B¨OSCH, C., and PETER A. uMine: a Blockchain based on Human Miners. Institute of Distributed Systems, Ulm University, Germany. Services, Cybersecurity and Safety Group, University of Twende, The Netherland. 2018-no date

MEWAWALLA, C. Thematic Research: Metals & Mining. Blockchain in Metals & Mining. GlobalData. 2018.