Worldwide car maker Volkswagen Group today announced a partnership with Minespider GmbH, a provider of distributed ledger blockchain technology for tracking ethical sourcing for raw materials, to track the production of its automotive batteries.

Using blockchain technology, it’s possible to tag and track every step along a supply chain from when a mineral is dug out of the ground in a mine through the refinery where it is processed into components and all the way to the finished battery as it rolls off the factory line to get installed in a car.

Volkswagen will pilot Minespider’s ethical supply chain blockchain in order to gather better data about where its raw materials come from and how that material is used. Beginning in April, Volkswagen will begin tracking the procurement of lead — used in the heavy batteries cars use as part of starting the engine — from its point of origin to the factory.

That point of origin could be a mine or a recycling facility. The blockchain pilot will involve gathering data from suppliers and subsuppliers that deliver more than a third of all lead for the automotive maker’s total lead starter battery requirements. As a result, Volkswagen will know more about its lead supply than ever before.

“We are witnessing a transformation of global supply chains,” said Minespider Chief Executive Nathan Williams. “Companies have the right to know that their suppliers are operating responsibly and with blockchain we finally have the tools to prove it.”

The solution from Minespider uses a multilayered approach to its blockchain that uses cryptographic keys to protect private information from prying eyes while enabling transparent tracking for auditors.

The first blockchain layer contains generally accessible data about the materials being tracked. A second later is the private data blocks chained together so that they cannot be subsequently changed. The final layer is the encryption layer. The objective over a single, permissioned blockchain is that everyone involved in the network is on the same system — from suppliers and subsuppliers to the sources that mine or recycle the materials — even if there are multiple supply chains involved.

The need to track the ethical sourcing of minerals and materials is a common problem for multinational corporations that produce computer chips, consumer goods and cars. Blockchain technology has been sought after to make the process of tracking and complying with laws involving minerals more transparent and readily automated.

For example, automaker Ford Motor Co. partnered with IBM Corp. in January to track cobalt mined for electric car batteries. Diamond supplier De Beers began using a blockchain January 2018 to track industrial diamonds and prevent trade in “conflict diamonds.” The World Wildlife Fund has also begun work on a pilot blockchain designed to provide transparency with ethically sourced food.

Using Mindspider’s blockchain, Volkswagen will have a pilot for the technology that will have the automaker join with numerous other industries in using the technology to better understand supply. Not only will it allow the company to better stay in compliance with laws governing raw materials sourcing and at the same time prove to consumers that everything in the company’s cars are ethically sourced.

“This [the pilot with Volkswagen] is the first step to proving that supply chain participants can work together to achieve greater transparency,” Williams told Hard Fork. “As a totally new and emerging field, we expect to learn a lot more about the challenges and requirements of the industry and what is needed to get this adopted at scale.”

This partnership follows news Volkswagen released last week that the company has also joined IBM and Ford in participating in another blockchain network designed to track and ethically source cobalt.

“Digitalization provides important technological instruments that enable us to track the path of minerals and raw materials in cross-border supply chains in ever greater detail,” said Marco Philippi, Volkswagen’s head of group procurement. “Together with Minespider we will use the blockchain technology to make our processes more transparent and secure.”

Image: Volkswagen