The world largest market of metal products, the London Metal Exchange (LME) has said that it will be backing the new initiative to track the physical metals by using blockchain, people familiar with the news said.
The new system will allow buyers to monitor their metal and also help traders to secure their inventory. The largest metal trading platform NME has backed Mercuria which is been headed by Swiss trader. Mercuria will be providing a better picture of the distribution of metals across the world. LME has supported to develop a system powered by blockchain to monitor metals like aluminum, copper, and zinc.
The Chief Executive of London Metal Exchange, Matt Chamberlain apparently did not respond over the involvement of the exchange in the new initiative, but he did speak to Financial Times “in a blockchain powered system you will know where your metal is, and you will be having evidence of your metal, but nobody will be able to see what your metal is and where your metal is.”
The Chief Executive of LME further added that if the industry comes together so as to deliver a similar kind of system, then it could be a big win especially for the trading community of metals.
The work of the system will allow industrial consumers to monitor the origin of their metal and will also provide ownership of their inventory to the metal traders.
This move comes in a wake when companies are facing huge increasing pressure from the inventors and NGOs to detail the impacts of the environment of their supply chains.
The London Metal Exchange does not have an authorized warehouse in China, which is the world’s largest consumer of metals. This is making it even difficult for traders and consumers to be certain about metals origin and also the status of demand and supply. However, the London Metal Exchange has sanctioned around 500 warehouses in 34 different locations across the world, wherein it will be storing metals on the part of holders, reports say.
The distributed ledger technology of blockchain could lower the need to have one central owner of the database, who could have to make enough of private data to be viable.
In the year 2016, the largest metal exchange LME had introduced an electronic system which was named as LMEshield. The LMEshield was used to trace the materials that were stored in China, although the initiative did not gain the needed success and lacked worldwide adoption by the industry.