After the Central African Republic (CAR) adopted Bitcoin as legal tender in April, yesterday, its President Faustin-Archange Touadéra announced on Twitter that the country plans to use blockchain to tokenize its mineral resources to raise funds.
Details of the country’s resources were shared by the Sango project, which was started by the Central African Republic National Assembly and is supported by the President. The PowerPoint lists CAR’s abundant mineral resources, including cobalt, uranium, gold, and oil.
There’s no question that the CAR has hugely valuable commodites deposits. But to date, tokenization initiatives have been for extracted metals and minerals, not those still in the ground.
Despite its riches, CAR is one of the poorest countries in the world, with one of the lowest GDPs per capita, estimated at $448 in 2019. The real question is why the government owns these resources and the world’s mining firms haven’t swooped in to buy them. One part of the answer is the country’s ongoing civil war since 2012 and the ESG issues of conflict minerals.
On the positive side, could blockchain be a solution to ensure that proceeds from mineral rights are appropriately used? In some other countries, citizens often don’t reap the benefits of the country’s rich resources. With blockchain, potentially the proceeds from tokenization could remain on a blockchain and the usage could be tracked.
There are a few metals and minerals tokenization initiatives. However, there are even more used for responsible sourcing to ensure ethical working practices and they aren’t conflict minerals.
Russian miner Nornickel was one of the earlier organizations to embrace commodities tokenization and initiated the Atomyze offering. In China, one of Baosteel’s affiliates uses blockchain-based credit certificates for steel purchases, and these are also bundled as asset-backed securities. HKEX-owned Qianhai Mercantile Exchange (QME) has partnered with Ant Financial for blockchain warehouse receipts to make them tradable.