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Blockchain in the Mining Industry

September 20 and 21 saw the latest edition of Smart Mining 2.0 held in Toronto. The presentations covered a broad range of topics related to technology in the mining industry, including artificial intelligence, cybersecurity and data management. Included in the proceedings was a panel featuring Dentons partner Adam Allouba and Ryan Darbyson of Blockchain Guru, speaking on the benefits for the mining industry of integrating blockchain into their operations.

Although blockchain is suitable for any situation involving data storage, a few applications in particular were highlighted during the discussion. This includes traceability of resources along the value chain to build confidence that they are not conflict minerals (as required by regulations in the United States and, as of 2021, the European Union). Blockchain can also be used to store information generated by Internet of Things (IoT) sensors, which can then predict outcomes through the use of AI algorithms (a topic Dentons has covered extensively at events earlier this year held in our Montreal and Toronto offices). In addition, smart contracts can be used to ensure an automatic link between, for example, shipments of resources by a producer and payments by the customer. Those transactions are written to the blockchain and can be viewed by the appropriate stakeholders in real time. Such a mechanism can contribute to the efficiency of various arrangements, such as joint ventures or option agreements.

 On the practical side, the panelists emphasized that it is essential to have enthusiastic cooperation from the staff on the ground who will be working with the technology. As one of the panelists during the conference said, “Culture eats strategy for breakfast.” As a result, if personnel dismiss blockchain as just another passing fad or, worse, something that threatens their position, it will be impossible to get the full-throttled buy-in necessary for the success of any major project. To that end, it is crucial for management to communicate clearly with staff the benefits to the company and to themselves of the new technology. In addition, to avoid friction and encourage personnel to feel ownership of the technology, the external consultants integrating blockchain must work hand-in-hand to educate employees who will be using it.

As with any novel tool or technology, blockchain comes with its own legal challenges. Among these is jurisdiction over the data, and smart contracts in particular. Since information on a blockchain can be stored anywhere in the world, it is not obvious before which court a dispute would be heard. In the case of smart contracts, which consist of lines of code, embedding choice of jurisdiction and forum language in the comments to the code can help avoid lengthy and expensive disputes about where litigation should take place.

Another challenge in litigating a smart contract is the difficulty of debating source code before a court, since neither the lawyers involved and the judge hearing the case are likely to be expert programmers. As a result, expert testimony may be required to translate the programming language into plain English. To mitigate the costs and delays such testimony can entail, just as a programmer would document their code with embedded comments to help colleagues understand how it works, the parties should document their agreement in the same way.

Finally, it is important to consider confidentiality issues. As a distributed ledger technology, blockchain entails storing data across multiple nodes controlled by multiple actors. That decentralized approach ensures blockchain’s robustness and immutability, but also makes it essential to identify mechanisms that prevent anyone with access to the blockchain from reading all the data it has recorded. Encryption is a must, while layered permissions enable finely-tuned control of who has access to what and “need to know” access, rather than a binary approach where whoever has the encryption key can see the entirety of the data.

As with any new technology, it is important in evaluating blockchain to separate fact from fiction. While it has faded somewhat from the public eye, blockchain’s adoption is proceeding apace among businesses that see the benefits of a robust, immutable mechanism for data storage and sharing. The potential uses are vast, and while the legal issues must be addressed properly and early on, the right advice will help your implementation succeed and create value.

Blockchain in the Mining Industry

Mining and Artificial Intelligence

On February 7, Dentons’ Montreal office hosted the local chapter of Women in Mining Canada for a lunchtime event on artificial intelligence and mining. A lively panel discussion took place before more than 60 people among the following panelists:

  • Sarane Sterckx, Project Manager, Goldspot Discoveries Inc.
  • Guy Desharnais, Director of Mineral Resource Evaluation, Osisko Gold Royalties Ltd.
  • Maiko Sell, Earth Data Scientist, Rio Tinto
  • Caitrin Armstrong, Machine Learning Engineer at Aifred Health and MSc candidate in Computer Science in the Network Dynamics Lab at McGill University
  • Adam Allouba, Partner, Dentons

Dentons partner Mira Gauvin moderated the panel, and the event was chaired by WIM Montréal president Kimberly Darlington of Refined Substance. SNC-Lavalin provided an interactive demonstration of equipment from its Innovation Centre in Toronto at the start of the luncheon.

With each panelist contributing insights from his or her own area of expertise, several themes emerged from the discussion. First, AI has serious potential to revolutionize numerous aspects of the mining industry. From analyzing geological survey results to directing autonomous vehicles to monitoring environmental or health & safety conditions, AI can be a useful tool in any application that blends data analysis with predictive capacity. As a data-driven industry, mining is a natural fit for AI. What’s more, many of the legal concerns that typically arise with AI, such as privacy and ethical questions, are typically not at issue in the natural resources sector since the data is purely scientific and technical in nature.

Second, as useful as it promises to be, AI is no magic bullet. Implementing AI requires the creation of multidisciplinary teams – including geologists, data scientists and, yes, even legal counsel! – to ensure that the project addresses the business’ real needs. The AI tools will need to be tested and retested before being deployed, and employees will need to be trained to use them properly. It also requires buy-in from senior management, who will often want to see proof of its value before making the required investments – and as the technology is so new and changing so rapidly, that proof is not always easy to provide.

Third, it’s essential not to neglect the legal aspects of implementing AI. Who is liable if something goes wrong: the software provider, the mining company, a third-party consultant or someone else in the supply chain? When drafting their contracts, the parties need to ensure to include the language necessary to protect them, including clear descriptions of the software being provided and its limitations, representations and warranties regarding the training data and the performance of the finished product, and indemnification provisions. What about intellectual property considerations, such as whether the company has the necessary rights to the training data or who will own any new IP that may be created by the AI software itself?

What’s for certain is business applications of AI are still in their infancy. As new use cases emerge, practical applications tested and best practices crafted, the technical, legal and other considerations that AI entails will evolve in ways that we in 2019 can’t yet envision. Only by closely monitoring developments in both the mining and technology sectors can an observer hope to keep up with the rapid pace of development that undoubtedly will only accelerate in the future.

Mining and Artificial Intelligence

The Building Block(Chain) of the Future

Everyone is talking about blockchain. The concepts may be fuzzy, but the consensus is that the technology will revolutionize the way we do just about everything. The mining industry is no exception and it is clear that blockchain and its cousin, the smart contract, show great promise as an addition to a mining company’s toolkit.  My colleague, Tracy Molino, and I co-authored this piece in Canadian Mining Magazine about use cases for blockchain in the mining industry, so check it out here and reach out if you have any questions.
The Building Block(Chain) of the Future