Open Mineral Exchange (OME): Blockchain Commodities Trading?

Commodity trading is an age-old industry that’s worth hundreds of billions of dollars. Soft commodities are mostly agricultural products while hard commodities are minerals and oil. These materials are constantly moving from producers to consumers in a global market worth about $80 billion, but it often lacks efficiency and transparency. Meanwhile, intermediaries make a lot of money just by acting as the middlemen. That’s where blockchain could, in theory, be applied, but introducing great transparency.

Open Mineral plans to just do that.

About Open Mineral

Open Mineral is a platform that connects buyers and sellers of physical commodities, launched with the aim of revolutionizing commodity trading by providing an intuitive interface to tender, negotiate, and execute contracts. Their robust analytical tools help in streamlining contract negotiations and execution to increase efficiency and profitability for the participants.

It is a Swiss-based startup founded by former Glencore traders (Boris Eykher and Ilya Chernilovskiy) who want to disrupt the decades-old model for trading physical commodities through use of technology and analytics. The company will initially cover zinc, lead, copper, gold, and silver concentrate markets and plans to expand to other raw materials in the future. They say that the potential market for the platform in copper, zinc, and lead concentrates is about $50 billion (£39 billion). This excludes concentrates produced by miners that have their own smelters.

Eight months after its launch in July 2017, the exchange now has over 140 companies as members and has witnessed a strong increase in the number of tenders for material on its cloud-based platform. After they realigned their fees and found their target market, they have seen an exponential increase in the number of tenders.

Open Mineral believes the commodity trading industry is antiquated but it still moves raw materials worth hundreds of billions of dollars around the world. This market often lacks the efficiency and transparency of many other industries. Open Mineral wants to fix all of this with their digital platform, Open Mineral Exchange, allowing parties to transact directly without bothersome intermediaries. On top of that Open Mineral digitizes and streamlines the complicated and paper-heavy process.

Recent Funding Round

Open Mineral has received seed funding $2.25 million. Notable come from Goldcorp (TSX:G), Canadian gold mining company, and Igor Kim of Xploration Capital. Open Mineral is the first startup to join Thomson Reuters Incubator, which hosts early-stage entrepreneurs building next-generation products in big data, advanced analytics, distributed ledgers, artificial intelligence, and other technologies.

“We are building an ecosystem where all participants have equal access to market information. You know all the options and develop best commercial strategies based on reliable data and first-hand knowledge of the market. You simply make better, more profitable decisions for your company.”, said their co-founder and COO Ilya Chernilovskiy.

Open Mineral Conclusion

These newer trading platforms for physical commodities have been appearing in the last couple of years. Tradecloud, for example, addresses the refined metal market, while Metalshub focuses on ferroalloys. None of the current platforms use blockchain. The Open Mineral model will rely on a success-based fee, which will depend on the value/chemical composition of the material and the volume transacted. The platform currently focuses on zinc, lead, copper, gold, and silver concentrate markets, but could expand into other concentrates in the future.

You can find more about the platform on .

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