AI and Blockchain: Transforming the Canadian mining industry
Fraser Buchan has a background in precious metals production, investing, and sales having previously worked in the Canadian capital markets. He has been involved in founding several precious metals companies, including NewCastle Gold, a publicly traded development company. He previously worked with GMP Securities, an independent Canadian investment bank and broker dealer in both Toronto and London in Institutional Equity Sales.
Tradewind Markets was formed in 2016 and has developed and launched a technology platform for digitizing the custody, trading and provenance of precious metals. The Tradewind solution combines world-class exchange technology with a blockchain application tailored for precious metals. Tradewind was a #DisruptMining finalist in 2017.
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1- Technological innovation is a part of the metals and mining industry now, and is accelerating at a tremendous rate – AI and blockchain are only part of a process that is redefining how business will be done in the industry.
2- The Canadian capital markets have leveraged their experience in allocating capital for the resource industry to include identifying and supporting technology ventures. It’s a very good sign for Canada’s continued leadership.
3- Engaging with the next generation of metals investors – that care deeply about social and environmental issues – requires better tools for managing information in the supply chain and identifying responsible actors.
While we remain a global leader in the resource business, Canada’s position is not guaranteed. Embracing innovation and change – even if it requires a small leap of faith – will be a critical factor in maintaining, and even growing, that position.
What is Tradewind and how is it combining technology and mining?
Tradewind is a digital precious metals market. We use a combination of electronic trading and blockchain technology to make the custody, trading and management of provenance information for precious metals simple and efficient.
On the trading side, we use the exchange technology of IEX – the US stock exchange dedicated to investor protection – to provide an alternative to existing means of execution like email, instant message, and dealing over the phone.
On the custody and provenance side, we have built a proprietary blockchain integrated with the Royal Canadian Mint to manage the ownership of physical precious metals, and to imbed detailed supply chain information into encrypted records of ownership. Blockchain is particularly well-suited to the precious metals market because it reduces cost and friction, while introducing security and privacy measures that would otherwise be impossible – or at least prohibitively expensive – to manage.
We believe that offering end investors in precious metals a digital solution that is easy to use, inexpensive, secure, and mobile compatible is an important step in preserving the attractiveness of the asset class. Furthermore, linking information about the supply chain of metal to a digital platform allows socially and environmentally conscious investors to identify and reward responsible actors like Goldcorp and the Royal Canadian Mint, and engage with a market that has been characterized in the past – often unfairly – as irresponsible and opaque. The next generation of investors care deeply about the social and environmental impacts of their investments, and currently the metals and mining markets provide very few opportunities to express that consideration.
How innovative is Canada’s mining sector and what areas of innovation offer the most potential to transform the industry?
Innovation in the metals and mining markets is expanding at a remarkable rate. The industry has long been criticized for being antiquated and slow to adapt, but that is changing. Smaller companies are building solutions from the ground up while, simultaneously, mature businesses like Goldcorp and Agnico Eagle are re-evaluating core operational practices through the lens of innovation and new technology.
For example, the use of artificial intelligence for analyzing the vast quantities of information generated by the mining industry looks particularly promising. It has the potential to be a new and much more efficient mechanism for evaluating and prioritizing opportunities for an industry that currently does so via analogue methods.
Another example is VRify, a platform focused on improving the experience of the end investor in mining equities by standardizing the collection of information, and presenting that information in ways that are intuitive and easy to consume. It uses various forms of digital content – photos, 3D models, video, documents – to enable mining companies to build narratives that are easy to follow, even without industry expertise.
Is the Canadian mining industry competitive on the global scale and what can we do to make it more competitive?
While we are a US company based in New York, we have generated the majority of our funding through the Canadian capital markets. Our largest shareholders include Sprott, a diversified asset manager and advisor in Toronto, and industry-leading precious metals producers Goldcorp, Agnico Eagle, Wheaton Precious Metals and IAMGOLD.
We have been very fortunate to partner with a group of companies that are embracing innovation and contributing to the development of technology solutions for a market that has long needed to embrace new opportunities. From a our perspective, that’s a very good sign that we’re on the right track.
Furthermore, the creation of innovation groups and events like #DisruptMining demonstrate that mining companies can benefit tremendously by partnering with innovative ventures that have an ability to pursue new ideas quickly and directly. We have built a symbiotic relationship with the industry – we listen, learn, and in turn develop solutions that make real business issues more manageable.
Also, interactions with regulators in Canada have been particularly constructive – there is a clear willingness to look at new market technology without an established bias.
Finally, to answer your question directly, we feel strongly that Canada is doing a lot of things right – from allocating capital to innovative companies, to adopting new ideas in large established businesses, to creating an open and supportive regulatory environment. While support from the Government would be welcome, the Canadian markets have already proven to be a great place to do business.
Is the competitiveness of Canadian mining companies, as well as that of their products, directly linked with the environmental and social sustainability of their practices?
Yes, absolutely. Canadian Mining companies adhere to the highest operating standards, and are globally recognized as leaders in promoting new ideas and solutions. Unfortunately, within the current market structure it’s very difficult for Canadian companies – and other responsible producers and refiners – to recognize the market value of their leadership. Because the gold market is highly fractured across products and locations, there are no reliable, economic solutions for marketing responsibly produced gold. We hope to change that by combining digitized ownership, with a blockchain to preserve the information that differentiates these actors, and then providing a marketplace to interact with consumers. Because we cross a number of different verticals – trading, custody and provenance – we are uniquely well positioned.
How do you envision the future of Canada’s mining industry?
We are part of a wave of innovation that is transforming the way the metals and mining markets operate. We are focused on the digital custody, trading and provenance of physical metals, but there are a lot of other exciting initiatives. If you go back 10 or 15 years, the industry would have resisted change and clung more closely to established ways of doing business. For a lot of different reasons – including expensive failures related to outdated market structures – that is changing and is very exciting.
“If you go back 10 or 15 years, the industry would have resisted change and clung more closely to established ways of doing business. For a lot of different reasons […] that is changing and is very exciting.”
As a final point, while we remain a global leader in the resource business, Canada’s position is not guaranteed. Embracing innovation and change – even if it requires a small leap of faith – will be a critical factor in maintaining, and even growing, that position.