Now in 2020, tech giants help other major producers with blockchain based tracking. Oracle helps Volvo to track cobalt for batteries in e-vehicles. Digital Asset Live Editor-in-Chief talked to Mark Rakhmilevich, Senior Director, Blockchain Product Management, Oracle
Q1: Oracle has completed a successful blockchain pilot to track cobalt supplies for electric cars by Volvo. How will the real life project function?
A2: The pilot that Oracle and Circulor ran in summer 2019 focused on identifying all the relevant organizations and steps along the supply chain where data needs to be captured, how to best capture it and ensure its authenticity, and how to link the records when dealing with physical transformation of the materials.
It also was designed to prove that this can be recorded on a permissioned blockchain at scale. All this has been worked out, so to get this into production meant onboarding the individual organizations and integrating scans and other data capture steps into their industrial processes, shipping and receiving.
Now with the core set of organizations supplying cobalt to CATL, the battery producer, in production, the objectives are to continue expanding the organizations and materials involved to cover 100% of the relevant suppliers and their materials.
Because of some challenges with another blockchain provider, Volvo has recently asked to switch their second battery supplier, LG Chem, and their supply chain to start tracking cobalt using the Circulor/Oracle blockchain solution and integrate Huayou Cobalt, a major Chinese producer, in the tracking process.
Q2: What problems does the project aim to solve?
A2: Electronic vehicle (EV) batteries use significant quantities of cobalt, 10-20kg depending on the carmaker and models.
Cobalt mining is heavily concentrated in the Democratic Republic of Congo, where a lot of it is mined in conflict zones, sometimes using child labor and other unethical practices.
Because of this it is important to 1) identify ethical mining sources vs. unethical, and 2) recycle cobalt from old lithium-ion batteries for use in new batteries, but in the process ensure that recycling firms also use safe and ethical practices.
Volvo Cars is committed to sustainable and ethical sourcing, and required its two EV battery suppliers, CATL and LG Chem, to participate in blockchain traceability of all cobalt mining and recycling processes.
The project aims to track all of the cobalt used in the battery units supplied to Volvo Cars linked to the full history of the cobalt it uses – from mining and recycling sources through the many complex refining, smelting, extraction, and other processes used by CATL’s and LG Chem’s suppliers, to the point where each battery unit is shipped to Volvo. And given the number of organizations involved at multiple levels of supply chain, gaining this end-to-end visibility wasn’t possible using current supply chain systems that typically don’t reach beyond the primary suppliers.
Q3: Why did you turn to distributed ledger technologies to solve these problems?
A3: Distributed ledger technologies (DLT) provides the right set of capabilities for capturing and sharing real-time, tamper-evident history across multiple organizations, deep in the supply chain, with non-repudiation via digitally signed records.
The validations by smart contracts and hashes produced for all the scanned data identifying the process, weight, time, individuals involved in handling and transporting the materials at various stages – these are all captured and anchored in the distributed ledger.
Q4: In this project, you cooperate with Circulor, a tracking service provider. What is their role, and how do you interact with them?
A4: Circulor is an Oracle partner that specializes in tracing conflict minerals and broader materials traceability. It provides the actual application components (mobile and web apps) for scanning and capturing different points in the mining, refining, smelting, and various recycling steps, as well as the smart contracts, which encode the business rules for validation of inputs and outputs, such as mass balance calculations to ensure the outputs of the smelting process match the raw ore inputs of the batch delivered to the refinery from a specific source.
Oracle Blockchain Platform provides the DLT technology and blockchain nodes in our cloud as managed PaaS offering, while Circulor provides the specific application components and smart contracts that run on the blockchain platform.
Q5: Which blockchain protocol did you choose to apply and why?
A5: Oracle Blockchain Platform is based on Linux Foundation’s Hyperledger Fabric open source project, with a number of Oracle enhancements to provide a hardened, enterprise-grade platform.
Hyperledger Fabric is a good match for permissioned enterprise-blockchain requirements, and in fact, the most frequently used technology in enterprise blockchain applications due to its strong performance (we can run at a few thousand transactions per second), security and confidentiality, modularity, and a strong Hyperledger community effort that evolves its capabilities with over 100 contributors from over 250 Hyperledger member companies.
The governance model under Linux Foundation ensures that all the members can participate in defining the direction of the technology using best practices that have been pioneered around the evolution of Linux OS.
Q6: Do you have plans to expand to other large manufacturers?
A6: We do have some discussions in place with other large carmakers, who also source their EV batteries from CATL and LG Chem. Conflict minerals and ethical sourcing are significant issues that prevail in many manufacturing sectors, not just automakers, so we expect to expand the footprint of this type of a solution for many other manufacturing companies.
Q7: Quite a few projects are in development now to trace with blockchain. Not many have such an experience, as you, though. What would be your advice to those who seek to launch projects in blockchain based traceability?
A7: I would recommend focusing on the 3 key points:
Understanding the business processes and workflow across the ecosystem in order to appropriately define what data needs to be traced, how to capture it properly to ensure physical materials and their transformations are authentically represented in the digital realm, how to manage it in the ledger and what business rules and validations need to be encoded in smart contracts.
Determining how to onboard and govern the members of the blockchain network based on their roles and capabilities. Some might run actual blockchain instances, others may only be able to join as clients connecting via an app, some need to only run transactions and query the data, while others participate in endorsing the submitted transactions and maintaining a copy of the ledger. All this needs to be mapped for each organization so that appropriate provisions can be made for each participant.
And, finally, you should leverage a managed, enterprise-grade Blockchain-as-a-Service infrastructure that’s sufficiently robust and production-ready so you can focus on the first two points and not spend a lot of effort on assembling, managing, and productizing the infrastructure of the blockchain network.