The mining and metals industries haven't embraced technology. Open Mineral, a member of the Thomson Reuters Labs Incubator, wants to change that.
A lot can happen in a year.
That seems to be what happens when an idea whose time has come gets the support it needs to launch, grow and flourish.
“We are way more successful than anybody in the industry thought we would be at this point,” Eykher said. “We’re even a little ahead of where we ourselves thought we’d be.”
Stepping out of tradition
The metals exchange industry is very tradition-bound, to say the least.
“The metals and minerals trades have always been behind the curve in terms of technology,” said Mitchel Ingham-Barrow, Global Head of Mining, Industrials and Automotive at Thomson Reuters. “It takes time, to be sure, to get caught up.”
For example, many important transactions are still conducted on paper.
“It’s not even scanned documents with digital signatures – it’s real, actual paper documents being sent all around the world,” Eykher said. “A physical document could literally go through four countries with multiple people examining every comma in a letter of credit before the sale can proceed. This is not an exaggeration. Ninety-nine percent of transactions are actually like this.”
“Basically, nothing has changed in this industry in the last 50 year,” he added. “There is tremendous potential here.”
Mining the power of blockchain
Open Mineral is a cloud-based exchange that utilizes blockchain to remove risk and uncertainty from transactions between entities in the metals industry.
“These very large companies all around the world, they do not know each other and they do not trust each other,” Eykher said, noting companies in the mining industry can struggle with cultural and language barriers. “What is happening is, you are selling millions or billions of dollars’ worth of material. What are you going to do? You are going to sell to a company you know.”
A business-to-business marketplace would take a lot of the uncertainty out of these exchanges, but there hasn’t been the right application of industry knowledge and experience.
“Very few marketplaces are successful in the business-to-business market,” Eykher said. “Business-to-business markets require a lot of insider knowledge to operate successfully. You have to be an absolute insider to pull it off. It’s complex, and that complexity is a natural barrier to entry.”
Charting a course for the future
This lag in industry growth worked out well for Eykher because it meant he could apply cutting-edge technology as he sought to fill the gap.
“We have basically taken the best risk-mitigating techniques that traders are using, and we’ve digitized and streamlined them,” Eykher said.
The way Ingham-Barrow sees it, Open Mineral has a real opportunity to transform its industry.
“I think it is important that we continue to look at what are disruptors in the market,” he said. “It’s an interesting experiment. I liked that they add transparency, and I think that’s something the market will appreciate, even if the market hasn’t yet fully acknowledged it as a chief value right now.”
To capitalize on Open Mineral’s promise, Eykher knew he needed a leg up. He was glad he could find that in the Incubator.
“We saw clear value in the collaboration,” Eykher said. “We didn’t have to make a lot of the mistakes that many new start-ups do, because we have a lot of intelligence and guidance at our fingertips.”