Use Cases
Use Case 4
Blended Product Provenance
The Problem
Providing provenance for blended commodities is notoriously difficult, and could hamper the United States’ efforts to build resilient supply chains for semiconductors. The US currently sources the overwhelming majority of key minerals for semiconductor manufacturing from the People’s Republic of China (PRC), including silicon, gallium, germanium, arsenic, and graphite. Over-reliance on the PRC for these minerals has been flagged as a major threat to national security by the United States Department of Defense (DOD), as increasing geopolitical tensions continue to result in a rise in tariffs and sanctions. To build more resilient supply chains for these minerals, the US has taken steps to establish new partnerships with allied nations such as the Minerals Security Partnership to relieve the dependence on the PRC.
However, policies such as these do not alone guarantee resilience, as new supply chains are still at risk of containing counterfeit and illegitimately sourced materials which if unchecked will undermine the goals of these new alliances. Raw materials pose a major risk for this type of malicious market penetration due to the ease with which illicit bulk commodities can be blended with clean products making the entire batch appear legitimate to auditors. Blending commodities to obscure provenance is a common technique to avoid the enforcement of sanctions, with examples ranging from Russian crude oil, Indonesian palm oil, Chinese honey and cotton, and more. Without the ability to identify the provenance of blended products, the US will continue to be at risk of supply chain exposure to the PRC, and will fail to build more resilient supply chains and provide greater national security.
The Solution
The United States must establish clear and verifiable standards for disclosing the provenance of bulk commodities built on an immutable system of evidence. Prevention of counterfeit products from entering mineral supply chains will rely on the cooperation of mineral suppliers voluntarily reporting data about their products and operations.
To accomplish this, the US government and private companies must establish clear standards that these suppliers are required to comply with, and articulate what type of evidence they must provide to verify their compliance. These suppliers must be incentivized, monetarily or otherwise, to provide this data in accordance with these requirements to offset the cost of participation and to avoid low adoption rates. The provision of this data must also adhere to a common data exchange framework so that all parties throughout the supply chain can participate, avoiding gaps and blind spots in the supply chain. Finally, bulk commodities must have an immutable digital record of their origin, custody, consumption, and conversion to avoid the introduction of illicit products, and tampering with the digital record. These efforts will incentivize participation from good actors, disincentivize bad actors, and provide a secure and easy-to-use protocol for exchanging and verifying data about blended commodities.
The How
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The US government establishes standardized requirements for specific commodity types, including what evidence is required for auditability.
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Capture the identities of companies that supply critical minerals through US supply chains on the Provenance Chain Network.
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Capture or ingest key data about the blended product batches, including origin, custody, consumption, and conversion activities to the products digital twin.
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Companies provide claims and supporting evidence for blended commodity products, captured immutably on the PCN platform.
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Authorized parties evaluate claims and evidence, and validate that they meet the required standards, approving them for sale or entry into the US.
The Benefits
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Broad participation through the supply chain for critical minerals.
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Immutable transactions improve the ease of auditing and sharing key provenance data.
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The solution provides a more comprehensive map of the sourcing for critical minerals, identifying bottlenecks and gaps.
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The immutable record and inclusion of evidence provides a disincentive to companies that attempt to introduce counterfeit goods, or plead ignorance to the provenance of their products.
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Implementation of this protocol for critical minerals will establish a framework that can be applied to other blended commodities, such as agricultural goods, chemicals, oil, etc.
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