1 Metals and Development

1.1 Economic growth

Metals mining stimulates economic growth by producing high-paying employment and supplying raw materials to every area of our economy.

By way of illustration, the U.S. metals mining industry supports more than 1 million jobs, and it is one of the highest paying in the private sector. Prospects are bright for the surrounding sectors, as it is estimated that each metal mining job generates 3.5 new jobs elsewhere in the economy. The domestic raw materials — along with recycled materials — were used to process mineral materials such as steel, aluminium, and copper, worth $766 billion.

In another demonstration, Liberia has made significant progress in reviving the mining sector in the last decade, which before 1990 had contributed more than 65% of the country’s export revenues and represented about a quarter of the country’s GDP. According to the 2017/2018 LEITI Report, iron ore and gold were the main commodities produced in the biennium. The stats analysis indicates that the minerals sector contributed about 41% of the total government receipts from the extractives sector during the mentioned financial year.

Industries including construction, technology, manufacturing, and automotive transform metals into the infrastructure and products we use daily. By providing essential raw materials and supporting thousands of jobs, metals supply transparency turns out to be critical to our economy.

Metals are irreplaceable components of modern technology. Take just one metal—platinum—as an example. Used in more than 20 per cent of all manufactured goods, this transition metal is essential to countless products we use every day, including flat-screen T.V.s, personal computers, hybrid cars and life-saving medical devices.

1.2 Applications

Advanced Energy Technologies

Metals are the backbone of renewable energy technologies. For instance, copper is used in the wiring of solar panels and is a critical component of wind turbines and wiring in electric vehicles. Another example is tellurium, which is essential to solar panels; the rare mineral feeds into semiconductor chips and is a critical element of solar photovoltaic cells that convert sunlight into electricity. It is also just one on a long list of minerals used to power both off-shore and on-shore wind power plants.

The global demand for metals is growing exponentially as governments commit to advancing energy technologies to address the climate change challenge. Solar arrays, wind turbines, electric vehicles (EV), and transmission lines all prompt demand higher and faster than ever before.

The International Energy Agency (IEA) recently issued a stark warning about the much-envisioned energy transition: Fail to develop the mineral supply chains for advanced energy technologies risk undercutting deployment at the speed and scale desired to meet emission reduction goals.


Without metals, many life-saving medical devices and even medications that doctors and patients rely on daily would cease to function. Elements such as copper, gold, and silver mined worldwide are crucial materials to operate computed axial tomography (CAT) scan devices. Likewise, lithium is widely utilised in defibrillator machines, pacemakers, and other types of portable electronic equipment. And titanium is used in orthopaedic surgery for items such as bone plates, pins, stentrodes, wires, rods, and prosthetic hands.

New studies also show the life-saving potential of metals. In 2018, researchers at the University of Queensland (Australia) announced the development of a new blood test that uses gold nanoparticles to track cancer cells in melanoma patients. The test helps doctors determine treatment effectiveness and predict patient outcomes.

In 2019 and 2020, several trial participants with paralysis had a stentrode implanted; they are now using the technology unsupervised at home in their daily lives. Roughly one centimetre long and three millimetres in diameter, the stentrode is made of nickel and titanium. It is inserted non-surgically into a blood vessel and travels to the brain, where it reads and transmits neurological signals that allow the patient to control a prosthetic limb or exoskeleton.


Metals are a key component of national security systems, and the military uses a broad range of metals for everything from ballistics to electronics and vehicles. Only the United States Department of Defense uses 750,000 tons of minerals annually—much of which is still sourced overseas. For example, beryllium is used in airborne equipment to detect and destroy improvised explosive devices. At the same time, chromium, nickel and molybdenum are combined in well-defined amounts and applied to purified scrap metal, resulting in steel armour plates able to withstand explosions and gunshots.

As the leading land-based arm of the military, the Army uses various metals and alloys to create exceptionally durable defence equipment and hardware. Magnesium and titanium alloys are highly sought after for structural and protective components. Magnesium exhibits an extremely high strength-to-weight ratio and provides excellent lightweight structural support for military aircraft, High-Mobility Multipurpose Wheeled Vehicles, trucks, ships, and missiles. Titanium alloy exhibits exceptional strength, is light, and withstands high impact and fracture stresses. It is often used for structural pieces and protective exterior panels on armoured vehicles, aircraft engines, pressure tanks, and missiles.

Aluminium is often the material of choice for military Marine applications due to its resistance to constant exposure to both freshwater and saltwater environments. Aluminium’s anti-corrosive property makes it better suited to outdoor and harsh marine environments than traditional iron-based alloys that rust or degrade when subject to these conditions.

2 Transparency and Corporate Social Responsibility

2.1 From ideas to institutions

From the mid-1990s onwards, particular NGOs acted as idea entrepreneurs with regard to transparency. Transparency International led the way with a generalised campaign against corruption, while Global Witness pioneered the intensive focus on the extractive sector with its report on oil and war in Angola five years later. The Publish What You Pay (PWYP) coalition campaign four years later brought together numerous non-profits in an alliance that spanned traditional mainstream NGOs with smaller, newer ones, including some from developing countries.

Their work was taken up by the U.N. Global Compact, which adopted anti-corruption as its tenth principle in 2004 (in addition to nine other principles on human rights, the environment, and labour standards). The representatives of these groups regularly interacted over the course of the decade, and their missions and activities overlapped. As the circle of advocacy expanded, the idea of transparency—particularly for resource-rich nations and extractive sector firms—appeared to be a common touchstone for all. In this environment, a new U.K. policy initiative was announced in 2002: the Extractive Industries Transparency Initiative (EITI).

The diffusion of transparency to conflict prevention and resource management was reinforced by overlapping interests and networks of activists in initially separate campaigns against corruption and against the use of natural resource revenues to support war. The implementation of information disclosure policies in the extractive sector has been propelled slowly forward by the EITI.

There were several barriers to the application of transparency to the resource development field. The companies concerned feared it would undermine their competitive position by disclosing information that their competitors did not. They had before them the negative example of B.P., which unilaterally released information on its payments in Angola, leading the Angolan government to threaten to bar B.P. from any future contracts. In most cases, governments favour confidentiality clauses in extractive sector development contracts. Full information disclosure is not interested in rent-seeking elites, who benefit from the obscurity cloaking oil and minerals development.

2.2 The Extractive Industries Transparency Initiative (EITI)

Initially a unilateral foreign policy effort by the U.K., EITI has evolved into a global program. As the initial statement of principles said, “The Initiative is grounded in a shared belief that the prudent use of natural resource wealth has the potential to provide the basis for sustainable economic growth and development.” As the statement put it, the problem was that “wise management” of these resources was often tricky and associated with a range of harmful effects—corruption, conflict, environmental degradation.

The initiative proposes that extractive sector ªrms should report all taxes and fees paid to governments. Administrations, likewise, should publish their income from resource licenses. These reports would be audited and made publicly available, allowing citizens to scrutinise the major source of revenue flowing into the country’s treasury. The reconciliation of these accounts would shine a light on discrepancies and discourage misappropriation of funds. The initiative requires action by governments, businesses, and civil society groups and promotes multi-stakeholder consultations among them. Ideally, civil society would mobilise and demand reform in response to evidence of poor management and corruption. The EITI was thought of, from the very beginning, to be a voluntary program with international participation.

Since its commencement, the Open Government Partnership (OGP) has animated its resource-rich members to commit to joining the EITI. A review of pledges made under the EITI and OGP in 2017 found that 7% of all commitments were related to the extractive sector. Since then, points of collaboration have intensified as new issues have come about, especially beneficial ownership, open data and E-government. Consequently, the EITI and OGP signed a memorandum of understanding to formally align their complementary spheres of work (see Figure 1).

Beneficial entitlement transparency is a particular challenge in the metals mining sector. Setting practice on emerging issues and tackling anonymous companies were two of the first targets sought by transparency organisations. As the full scope of the chore has become more apparent, OGP has been running alongside the EITI, getting more countries to sign up to divulge hidden ownership and developing best practices.

2.3 Metals as resource & resource management

The term Natural-Resource Governance (NRG) is used to improve transparency and accountability in managing natural resources. The range of initiatives covered comprises licensing, exploration, contracting, extraction, revenue generation and allocation of natural-resource revenues, and the relevant actors involved, including governments, private companies, non-governmental organisations, the media, and civil society in general.

In this article, the range of natural resources refers to the governance of non-renewable resources, specifically metals. This is not to ignore the attention of controversies around fisheries, land or water management, which the specialised literature has well documented. Yet, over the past decade, the spread of ‘global governance’ initiatives has basically focused on the former, starting with the establishment of the Kimberley Process Certification Scheme (KPCS) in 2003 and continuing with the Global Witness/ PWYP Coalition and the Extractive Industries Transparency Initiative (EITI).

The increasing interest in the accountability and transparency of the extractive sector forms part of a renewed governance agenda that affects global and domestic arenas. At the international level, the transparency and accountability agenda seeks to mollify the negative impact of the global financial crises and pushes for a greater balance between conventional and sustainable production methods.

The core goal of CSR can be achieved by adhering to fundamental principles. Transparency is one of the key principles of socially responsible behaviour. Transparency is defined as openness about decisions and activities that affect society, the economy, and the environment and willingness to communicate these in a transparent, accurate, timely, honest, and complete manner.

Accounting provides basic information about a company, including its decision-making on its operational, investing, and financial activities. It shows results in economic language. Accounting transparency is to report to shareholders and inform users about everything that can affect a company’s financial position. Therefore, transparency, as one of the main principles of CSR, includes clarity of accounting information.

3 How do We Measure Transparency

3.1 Constituents

What do we mean by transparency? The creation, disclosure, and access to information is at the heart of transparency. Knowledge transfers correct asymmetries and enable regulatory effectiveness and accountability. Information access can empower citizens and collectivities to act and hold others accountable.

Specialists refer to this as:

Transparency = Evidence + Disclosure + Access, or as notes, ‘T = E+D+A’.

Evidence is a record of relevant information, such as transactions or events. This could be payments in the metals value chain context (e.g., rentals for natural resource licences, commodity purchases). The collection of evidence is a prerequisite to transparency. Disclosure of information enables accountability and monitoring, so the more information is disclosed, the more transparency deepens. But if the availability of that information is limited (e.g., to NGOs and regulators), then transparency falls.

Law, regulation, and policy are the starting points for identifying the ‘who, what, where, when and why’ of transparency. These set out the legal preconditions (both hard and soft law) of what information is accessible (e.g., what is created, by whom, how it is created, record retention period, etc.); who are the disclosing and recipients (e.g., government, companies); and which observers can access for monitoring and accountability.

Although it may appear to be rather unusual to illustrate a legal idea using a mathematical formula, T = E+D+A, it seems entirely appropriate to do so in relation to achieving transparency via quantitative and qualitative methods. It is also a supportive technique because it focuses attention on the constituent elements of the concept and the relationship between them.

3.2 Quantitative methods

The previous section pinpointed how few systematic attempts are made to explain how greater transparency may lead to improved governance payoffs. Yet, a far more complex task is to demonstrate the effectiveness of such impacts. The use of quantitative data is, presumptively, the most accurate way to map the direction and magnitude of repercussion while avoiding biases inherent to the measurement process.

This approach has not received sufficient attention in the evaluation of extractive transparency initiatives, partly owing to the lack of clarity in figuring out what the impact variable is about (outcomes or processes?), and partly because of the lack of systematic data to capture project interventions (number of beneficiaries, allocation of funds, etc.).

Example: Earnings transparency

We can measure the transparency of companies in the aspect of accounting information and then test the association between earnings transparency and CSR commitments. Earning is an essential line item in financial statements. It is vital information of a company’s performance and a determinative factor of its value. Research studies have defined the explanatory power of earnings information on corporate economic value as earnings transparency and devised measures of earnings transparency of individual firms. In an efficient market, we assume that stock returns can sufficiently reflect changes in the firm’s economic value. Therefore, the fact that earnings information explains the stock return well can be interpreted as that earnings information can well represent the change of the monetary value of a corporation. Measuring earnings transparency of an individual firm is possible based on the explanatory power of earnings information on stock price returns.

Given that corporate profit is a representative summary indicator of management performance, earnings transparency is also an essential part of accounting transparency. Recent studies showed that companies with superior CSR endeavours had higher earnings transparency. This suggests that the more a company observes CSR, the more it gets trust from market participants on earnings information.

It has also been found that a company with a longer period of CSR activities had higher earnings transparency. This implies that CSR activities on an ongoing basis encourage a company to disclose its information to outside stockholders in an open way. In addition, CSR activities had a positive market effect not only in terms of short-term event nature but also in a long-term perspective.

To measure the extent of CSR activities, well-known indexes are employed for the analysis. Most consist of seven categories: (a) soundness of capital structure, (b) fairness of trade, (c) contributions to communities, (d) consumer protection and satisfaction, (e) environmental protection, (f) employee satisfaction, and (g) contributions to economic growth (Table 1).

3.3 Qualitative methods

These evaluations tend to hand over direct or indirect evidence of the positive effect of transparency actions on improved governance outcomes, generally reflected in the progress of governance processes, such as widened participation of stakeholders or more data disclosure. One advantage of this direct path is that stakeholders are the best source to identify whether a programme intervention was successful or not and qualitative insights into controversial issues.

However, these evaluations are not exempt from reproducing the judgment biases of the authors or the evaluating organisations that sponsor such studies. A common concern is the  ‘endogenous assessment’ when the effective impact of initiatives is evaluated by commissioned reports requested by donor agencies themselves.

Example: Questionnaires

The most recurrent way to appraise impact is via qualitative methods, such as conducting expert interviews with key stakeholders responsible for implementing, or directly benefiting from, transparency initiatives. Key stakeholders include EITI Board members, local and global civil society members, elected and non-elected public officials, and industry executives.

A related but systematic format to assess impact is through questionnaires for evaluating programme beneficiaries or affected stakeholders. A recent Assessment of Civil Society Involvement for Liberia uses a similar approach to demonstrate an effective impact of transparency initiatives on governance outcomes:

The use of systematic questionnaires is usually time-consuming and more expensive, and therefore is not as common among companies in the metal supply chain. But the data introduced in this form are traditionally better validated by a higher number of respondents, assuming the surveyed sample is representative enough. Another challenge is making inferences about actual impact in the absence of a guideline evaluation or when the cluster of survey respondents at the end of the project is different from those identified initially.

Existing evidence of direct impact is also likely to increase as countries are exposed for more extended periods to transparency initiatives. In the case of EITI’s commencement processes, evidence was meagre in 2009 when the Rainbow Insight report could not cite any paradigmatic country that had undergone a successful EITI validation experience, much less an actual disclosure of N.R. revenues for public use. By 2011, ten nations had become EITIcompliant, thus expanding the scope and period to evaluate the impact on observable governance outcomes. Evidence of the impact is also limited or inconclusive in cases where territories have not yet benefited from the extraction and transfer of N.R. revenues.

4 Blockchain to Improve Transparency

4.1 Blockchain fundamentals

None of the matters previously introduced can be assessed or corrective actions taken to counter undesirable effects unless the information collected at national and regional levels is reliable and available to regulators elsewhere. Also, market participants and other actors need to access this information. This leads us to ask –could governance of metals be improved by using blockchain technology to complement existing policy tools? Could facts about these systems be made more transparent – becoming more informative, accurate, accessible and functional and provide greater access systemically?

Blockchain is a transformational computing innovation. It is a distributed database (or ledger) stored in multiple locations (using cloud technology), usually by different entities on the network. Its cryptographic nature enables a persistent, tamper-evident record’ of transactions, which includes party authentication. The first purpose of distributed ledgers is to document and maintain the information, specifically, proof of transactions, containing rights to assets and a record of the parties’ activities.

It is crucial at this point to note that there are numerous plausible ways to implement blockchain technology. All rely upon some common technological elements, but the multiplicity of choices about how other aspects of the blockchain work together means that ‘blockchain’ describes only the standard features and says little about what the existing blockchain system looks like.

4.2 Information transparency through blockchain

Blockchain has the potential to disrupt the typical way transactions are processed, and resultant registries are maintained. Blockchain could disrupt traditional methods of governance and improve sustainability outcomes. It would do this by reliably recording information and making it available to all those interested in achieving transparency in the metals supply chain. Blockchain is an innovative computing technology capable of disrupting and transforming traditional ways of doing business. It is portrayed by the decentralisation of information storage, enhanced information accessibility and data security and immutability.

These features suggest the technology could be a viable tool for revamping transparency in the metals value chain, given blockchain’s potentiality to change business models. Enhancing the transparency of metals leads to greater accountability as reflected in market decisions across the value chain. Markets need more transparency, including transparency of metals products and services (‘green claims’), minerals sources, and social license (community relationship management and reporting).

The purpose of this section is to analyse blockchain’s capability to improve transparency in the metals sector. By doing so, we explore the use of blockchain to support a governance framework to track sustainability across the global metals value chain. In doing so, we posed three essential questions:

  1. How are metals currently structured for transparency, and how could the current structures be seized via blockchain?
  2. How could this technology, by enhancing transparency in indicators, support a global governance framework to track sustainability outcomes across the metals value chain?
  3. How could a blockchain scheme for global transparency be devised apropos the differences between different local regulations?

The main benefits of the technology are that it enables information to be recorded in virtually unalterable ways and captures each and every transaction involving that information. When applied to indicators aimed at improving metals transparency and sustainability, blockchain can achieve six significant benefits.


Metal production is compared against allowances, thus enabling stocks to be traded based on information supplied by the producer and the government. Any regulatory examination on the accuracy of that information is retrospective through an audit. Primary data about metal production is captured in real-time and recorded on a blockchain, perhaps via sensors built into the facility that weigh mineral ore to capture the data at the source. Then, the code can be used to match those allowances automatically against the source actual production.


Since paper documents can be forged, and centralised database records can be compromised through internal fraud or external hacking, falsification of credits and certificates is a real problem. By contrast, a credit or certificate recorded on the blockchain is made singular through encryption technology. It can only be created or transferred employing the unique digital signature of the person entitled to create or share it. When this occurs, the transaction is recorded on the blockchain.


Ownership (or, more precisely, entitlement) is not an issue where certificates are registered on a blockchain. The digital signature of the individual entitled to govern the asset is reported against it, and so the seller’s entitlement can be verified simply by ensuring the seller controls the signature key. This, too, touches on evidence for T = E+D+A, particularly about the reliability of that evidence.

Reporting and audit

Reporting and audit are inevitably costly and time-consuming; it also leads to intermediaries facilitating trades and ‘trusted’ third parties to verify data reporting. If the system were to transfer to the blockchain, an authority would be able to acquire data directly from its source, and instead of (or as a cross-check on) third-party audit, just execute its own analytical code on the blockchain data. Real-time monitoring is always more helpful than historical reporting, and there would be no need for the expenses and delays associated with utilising verification entities.


An adequately designed blockchain system will capture all relevant information, including transaction history, store it unchangeably and make it readily available. This is perfect for establishing a reliable and effective approach. that deters fraud and detects an error. Accuracy is also crucial for the labelling function of certificates of source and other sustainability labelling schemes.

Cross-border interchange

It is noteworthy that the regulatory systems for transparency are siloed, both within a country or territory and, in particular, internationally. Information is seldom transmitted between national regulators (or only with difficulty), and it is even harder to exchange information across national borders. The barriers to coupling different blockchain systems via information transfer protocols are low, and the internet’s global information architecture makes it just as simple to connect cross-border as well as domestically.

4.3 Possible applications

Aggregator blockchains

A single and global blockchain that captures all the information relevant to metals transparency is hardly feasible. Leaving aside the practical strains of building such a massive piece of technology, it is evident that agreement between regulators, governments, and players in the metals supply chain would take so long that some other technology would probably supersede blockchain before negotiations were concluded.

Instead, we perceive this as a gradual process that begins with, for example, existing systems for market-based instruments (MBIs) such as green certificates for the energy value chain (Figure 2). Once these are migrated to blockchains, designed to interchange information with other applications, it is possible to build aggregator blockchain systems that take proper data from those application-specific blockchains and combine it, probably on a regional basis in the beginning but aiming at global universality in the long term.

We can illustrate this by depicting graphically how information might be integrated to achieve global sustainability assessments for firms, countries, as follows:

This kind of layered model also streamlines some of the governance issues. Each local ledger, say, a blockchain recording issuance of and dealings in sustainable supplies of metals, will have a local ‘owner’ (if so, most likely the regulator). The local owner will handle the system administration duties; however, they may alternatively be outsourced (not to mention hosting the blockchain) to a cloud service provider. Local governance will arbitrate the appropriate balance between competing interests, such as confidentiality and disclosure, and these will figure who can post to and read the blockchain.

Aggregator blockchains operated by a single entity, such as an NGO, confront none of these direct governance concerns but will nonetheless require a blockchain system that inspires trust among their stakeholders. Owners of blockchains who desire to receive information from such organisations would want assurances that what they disclose will be presented fairly and adequately, and, similarly, those receiving reports will want them to be accurate and complete. External monitoring may be required to offer such reassurance, perhaps undertaken by professional service firms as auditors.

Cobalt case study

There is a flourishing interest in deploying blockchain technologies in erstwhile traditional or fragmented industries, such as the artisanal mining that characterises the economies of various developing countries. Cobalt is one such extractive element, and its mining has raised concerns for nefarious aspects such as (1) child labour and (2) conflict minerals.

A pilot scheme was introduced in the Democratic Republic of Congo (DRC) that will deploy blockchain solutions to track the movement of cobalt from artisanal mines in the upstream portion of the supply chain, downstream until they are used in devices such as smartphones and electric cars. An essential aspect of the scheme is to improve the levels of accountability and transparency in the extractive industries, mainly to ensure the reduction of forced child labour in the sector.

The DRC is the central focus of the initiative because of the large concentration of the element’s mining in Congo, which is the world’s largest producer. Estimates of reserves suggest that Congo holds roughly half of the world’s cobalt and that the industrial demand for the element will rise in tandem with derived demand for technologies such as electric cars. In 2016, Congo mined 54% of the 123,000 tonnes of the international cobalt supply.

The precedent for cobalt’s blockchain systematisation comes from the diamond industry, another critical African extractive sector. Within the diamond space, each gem is given a unique digital marker (“fingerprint”) that is then tracked by blockchain as and when gems are sold. This allows for a forgery-proof, immutable record of the provenance of these stones.

However, the cobalt supply chain is characterised by a higher degree of complexity than the diamond one, with more than double as many procedural steps in its extraction than in diamonds. This is exacerbated by weak extant accountability and oversight mechanisms that preclude streamlined ethical extractive processes.

The blockchain parameters to measure outputs using digital tags may include weights, dates, times, images, and the like, while inputting the data onto the blockchain may be done using mobile devices. From the source of the extraction, other downstream elements such as traders and middlemen can verify and record details before sending cobalt ore downstream to the smelters.

5 References

Minerals Make Life – National Mining Association


Park, H., & Ha, M. (2020). Corporate social responsibility and earnings transparency: Evidence from Korea. Corporate Social Responsibility and Environmental Management. doi:10.1002/csr.1922

Haufler, Virginia. (2010). Disclosure as Governance: The Extractive Industries Transparency Initiative and Resource Management in the Developing World. Global Environmental Politics. 10. 53-73. 10.1162/GLEP_a_00014.

Hunton, J. E., Libby, R., & Mazza, C. L. (2006). Financial reporting transparency and earnings management. The Accounting Review, 81(1), 135–157. https://www.jstor.org/stable/4093131

Transparency at source: How do countries fare? | Extractive Industries Transparency Initiative

OGP and the EITI – creating a transparency circle

Barth, M. E., Konchitchki, Y., & Landsman, W. R. (2013). Cost of capital and earnings transparency. Journal of Accounting and Economics, 55 (2–3), 206–224. https://doi.org/10.1016/j.jacceco.2013.01.004

Downes, L., & Reed, C. (2020). Distributed Ledger Technology for Governance of Sustainability Transparency in the Global Energy Value Chain. Global Energy Law and Sustainability, 1(1), 55-100.

Fair Cobalt Alliance: Let’s Talk About Cobalt

Chohan, Usman W., Blockchain and the Extractive Industries: Cobalt Case Study (February 20, 2021). Available at SSRN: https://ssrn.com/abstract=3138271 or http://dx.doi.org/10.2139/ssrn.3138271