What are the upcoming trends in supply chain traceability?

Supply Chain Traceability is the means through which supply chain due diligence, product passports, extended producer responsibility and increasing recycling rates become possible. It is thus critical to driving a sustainable future. 

However, the value of traceability is determined not by the information it generates, but by what you can do with it. There’s no point in traceability if there are no resources left to act on the information it generates. That’s why, to me, traceability needs to be seen as a common good and to be as cheap as possible. Most resources should be going to take the actions that really will drive change in minerals value chains. If forced labour is the issue, then it’s important to know which provenances are higher risk, yes, but that is only so I can put in place the right supply chain controls to reduce the likelihood of the risk arising, and its severity should it arise. That means investments in prevention, minimisation and remedy in the affected territories, communities, and entities; it should not mean avoidance and boycotts save in exceptional situations, such as conflict financing. 

So in the year ahead, I see a rationalisation of traceability solutions, with consolidation driven by both the commercial, social and environmental value that each provider can deliver as well as the degree of interoperability that is achievable. I also see a lot of efforts to standardise data governance to facilitate data sharing across jurisdictional and corporate boundaries, in the interest of the common good. Because, after all, that is really what traceability should be here to do.

In today's dynamic markets, supply chain traceability takes center stage, especially amidst global tensions and trade disruption. Europe faces a challenging journey towards a more responsible, resilient, and diversified raw materials sector and has defined ambitious goals in its Critical Raw Materials Act. 

While companies and governments are increasingly addressing traceability and responsible sourcing aspects of their vital supply chains, there remain significant challenges. A toolbox of metrics, standards, certifications, and regulations, backed by cutting-edge technologies like blockchain and IoT, is deployed to tackle these hurdles. Streamlining these measures is in progress to facilitate their implementation and boost their impact. 

In this context, projects like Raw Material Radar, a project co-funded by EIT RawMaterials, champion technologies that enable and validate responsible and legal Artisanal Small-Scale Mining (ASM) operations in the EU mineral supply chain. Other EU-funded initiatives, such as CSyARES and MaDiTraCe focus on creating standardised sustainability certifications for rare earth elements, emphasising the Product Environmental Footprint and enhancing transparency, reliability, and sustainability in complex critical raw material supply chains. Transparent and trustworthy assessments are an essential cornerstone in this context. Industry, governments, and NGOs must engage in a concerted effort to ensure successful implementation. Trust and readily available granular and standardised data are at the core of this critical endeavour.

It is difficult to describe blockchain technology as a "trend" as it has been a buzzword in the logistics industry for some time now. That being said, we are seeing more companies experimenting, innovating, and implementing blockchain in the supply chain.

The benefits of blockchain are undisputed and well-known. Whereas the "traditional" model is based on a centralised system, which can be vulnerable to data manipulation and cyber-attacks, blockchain provides a decentralised system that can facilitate supply chain transparency and traceability. 

However, blockchain is a relatively new phenomenon. Its full potential is continuing to be realised. The latest development is its role in the emerging "Internet of Things" (IoT) - a network of physical things (e.g. containers, cargo etc.) implanted with technology, such as Radio Frequency Identification Tags (RFID) and smart sensors, allowing these to be tracked and monitored in real-time.  

Among other things, the Internet of Things will improve supply chain traceability by providing automated and up-to-date information on cargo (for example, by giving information on the condition, temperature and environment of the cargo). Equally, with every opportunity comes an opportunist looking to exploit the system. Naturally, the increase in reliance on new technologies will bring a "trend" in investing in and increasing cyber security to identify and address new potential weak spots in the supply chain. It will be interesting to see how the stakeholders approach these latest developments in 2024.

2024 will be the year that traceability moves from being a ‘nice to have’ to a baseline requirement to do business for raw materials suppliers. Companies have been facing increased regulatory pressure to report on sustainability in their supply chain for the past few years, however, this year geopolitical pressure will play an increased role in the transparency transition. 

To counter the ongoing Russian invasion of Ukraine the G7 has passed 12 sanctions packages since 2022. The most recent of which puts into place not only a ban on Russian diamonds, but a requirement for a robust verification and traceability system for all rough diamonds within the G7. This measure is a first of its kind and similar traceability requirements are to be expected for other raw materials going forward, as the G7 attempts to prevent goods from evading sanctions.

With market restrictions being placed on material supply it is very likely that the transparency transition will be led by suppliers of raw materials rather than downstream manufacturers. To access G7 markets, suppliers of key materials will adopt traceability systems voluntarily, in order to front-load transparency data and retain preferred supplier status with downstream clients. It will become a regular practice to purchase raw materials with a digital material passport (DPP) that shows product authenticity, ESG certifications, and material provenance. 

We should expect the 34 materials named in the EU Critical Raw Materials Act to be the first to adopt such passports, with particular emphasis on any material that has significant global suppliers based in Russia.

When we discuss sustainability, carbon emissions reduction, and traceability, we always have the same question “Who's going to pay for that?”. I don't think that's the right question to ask.

We do have a certain pressure from regulators, but we should not wait until the regulation comes into force. We should act ahead of time. It's the final consumer, the one that defines all these demands, and our duty is to listen to the final consumers. If consumers want traceability and are concerned about where the minerals come from, standards and compliance with policies, we should listen and set up a strategy. 

In my opinion, sustainability initiatives will and should be perceived as investments in the future.

Right now we are implementing the largest blockchain traceability project in tin on our San Rafael mine in Peru. We expect other minerals producers to follow, and traceability to become a more common practice for all minerals, especially the critical ones.