Baosteel and Rio Tinto complete first deal on Contour platform
Contour, the open trade finance network, has today announced the completion of a Baosteel and Rio Tinto deal, supported by Chinsay, DBS Bank, essDOCS and Standard Chartered Bank, marking the first fully integrated paperless trade for Rio Tinto with a Chinese counterpart.
As the first paperless deal in the iron ore industry to be transacted in Chinese Renminbi (RMB), the trade signifies an important step within the market for supporting the RMB currency. The collaboration between Rio Tinto and Baosteel also showcases how digital initiatives can effectively enhance the efficiency and security of cross-border trade finance flow, at a time when delivery of physical documentation can be more challenging.
The paperless trade was possible thanks to Contour’s partnership with Chinsay – announced in March – and Chinsay’s ICP platform, which provides the corporate workflow and data for the process, allowing companies to easily collaborate in one place. The Letter of Credit (LC) issuance and approval of key contract terms was performed digitally and completely paperless, enabled by Chinsay and its ICP software.
essDOCS, another Contour partner, managed the electronic bill of lading and other documentation through their CargoDocs service. Rio Tinto, Baosteel, ship agent, shipowner, DBS Bank and Standard Chartered Bank collaborated to draft, approve, sign, issue, transfer and electronically present the eB/L plus upload supporting documents. This resulted in significantly reducing trade document turnaround times and accelerating the trade via integrated data flow enabled by the CargoDocs-Countour interface. This application is vital in a new era where physical documents could be a major barrier to completing a trade.
The transaction also marks DBS Bank’s first on Contour as the latest member to join the network. A leading financial services group in Asia, DBS was the advising and nominated bank for the deal, together with Standard Chartered Bank, a founding bank of Contour, as the issuing bank.
Carl Wegner, CEO of Contour said: “To have another transaction take place on Contour’s network by two well-renowned names highlights the relevance this technology has for the sector. 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. This transaction, combined with another well-respected financial institution joining our network and our ongoing relationship with Chinsay and essDOCS, furthers Contour’s aim of providing a neutral network where LC transactions can be conducted from start to finish.”
John Laurens, Group Head of Global Transaction Services, DBS Bank, said: “Sustaining and developing supply chains has never been more essential than it is right now. As businesses accelerate their digitalisation objectives to find new opportunities and counter challenges in the current trade environment, a collective effort across banks, industries and technology providers is key to driving digitalisation in a manner that delivers the network effect that is vital to trade. Digitalisation of trade presents an opportunity to not only transform the long term relationships with our clients, but also provide the necessary means to bring about sustainable and transformational changes to businesses, large and small, and across the ecosystems they are part of. As the latest member to join the Contour network, we are proud to have played an integral role in this landmark transaction by facilitating the first cross-border RMB-denominated trade settlement done digitally, where DBS took the lead as Rio Tinto’s nominated and advising bank to effectively manage forex risks pertaining to the transaction.”
Simon Farry, Vice President, Sales & Marketing for Rio Tinto’s Iron Ore business: “The successful conclusion of this transaction with Baosteel demonstrates Rio Tinto’s commitment to collaborate with our customers and drive yet another first in the iron ore industry – paperless RMB trade. We will continue to utilise technology such as blockchain and end-to-end paperless solutions to enhance our customers’ experience and bring the industry closer to a full cross-border digital trade future.”