Blockchain trade finance network Contour has chalked up another first, with the completion of a transaction between Rio Tinto and Chinese state-owned steel firm Baosteel marking the first paperless renminbi (Rmb)-denominated deal in the iron ore industry.
The deal, in which Baosteel purchased approximately Rmb100mn-worth of iron ore from Rio Tinto, saw seven parties come together to create an entirely digital end-to-end process at a time when delivery of physical documentation is facing challenges due to COVID-19.
Supply chain data firm Chinsay, which became an order partner for Contour last month, provided the corporate workflow and data for the process. Standard Chartered, a founding bank of Contour, acted as the issuing bank for the letter of credit (LC), with approval of key contract terms performed digitally over Chinsay’s ICP software. essDOCS, another Contour partner, managed the electronic bill of lading (eBL) and other documentation through its CargoDocs service. Meanwhile, Rio Tinto, Baosteel, the ship agent, shipowner, Standard Chartered and DBS – which acted as advising and nominated bank – collaborated to draft, approve, sign, issue, transfer and electronically present the eBL as well as upload supporting documents.
“To have another transaction take place on Contour’s network by two well-renowned names highlights the relevance this technology has for the sector,” says Carl Wegner, CEO of Contour. “Now, more than ever, there is a greater demand for seamless, digital sign-off for the LC process. 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.”
The transaction also marks Singaporean bank DBS’s first on Contour as the latest member to join the network earlier this week, as the network continues to expand its reach. Last week, Vietnam’s HDBank became that country’s first financial institution to join Contour, with its CEO Phạm Quốc Thanh saying that the bank looks forward to announcing its first blockchain transaction.
“From the very beginning we were lucky to have the founder banks who were a mix of international banks, regional and smaller banks. But this is not eight banks building a system. This is a network. And the network is now beginning to grow. It is growing based on where corporates are doing business,” Wegner tells GTR. He adds that Contour now has “quite a pipeline” of banks and corporates from the Middle East to Europe as well as different parts of Asia, which will be joining the network in due course.