Banking News

Rio Tinto, Baosteel use Contour blockchain for iron ore trade

rio tinto

Earlier this week, Contour trade finance blockchain announced Rio Tinto and China’s Baosteel completed a yuan-based iron ore trade using its platform. It was the first blockchain-based letter of credit transaction on the platform for DBS Bank after it joined Contour on Monday. The Chinese government is encouraging trade to be denominated in the yuan / renminbi rather than the U.S. dollar and Baosteel is state-owned.

Contour, previously known as Voltron or Letter of Credit (LoC) blockchain, was launched earlier this year in Singapore. The iron ore trade involved other partners of Contour, namely Standard Chartered, Chinsay, and essDOCS. Standard Chartered was the issuing bank while DBS was the advising and nominated bank for the deal.  

Contour is digitizing the letter of credit process, which traditionally requires significant paperwork. Generally, documents are couriered separate to the shipment, which is slow and increases the risk of loss and fraud. Contour enables trade participants to digitally share trade documents such as the bill of lading, and supporting papers. 

Relying on paperless trade transactions has become even more critical due to the COVID-19 pandemic. 

“Now, more than ever, there is a greater demand for seamless, digital sign-off for the LC process,” said Carl Wegner, CEO of Contour. “The delays and archaic processes that have marred the trade finance sector can no longer happen, and effective solutions are vital to keeping the sector alive.”

Contour entered a partnership with Chinsay at the end of last month to integrate its Intelligent Contract Platform (ICP). This solution captures contract data and enables securing sharing between partners. And essDOCS provides electronic document signing solutions.

Contour’s platform is based on R3’s Corda blockchain. Contour was founded by seven banks — Bangkok Bank, BNP Paribas, CTBC Holding, HSBC, ING, SEB, and Standard Chartered. CitiHD Bank and DBS joined later. Previously, HSBC carried out a yuan-denominated LoC transaction for the export of electronics raw material. 

Meanwhile, Reuters reported on May 12 that BHP completed its first yuan-based iron ore sale to Baosteel. The world’s biggest miner, BHP said it is exploring using blockchain for such trades in the future.