The study “Internet-based Trading Platforms”, conducted for the Federal Institute for Geosciences and Natural Resources (BGR), analyzed the suitability of internet-based trading platforms for a trade of commodities that can be considered conflict-free. Metal ores in the focus of this study were tantalum, tungsten and tin ores – wolframite, tantalite and cassiterite. The basic model of an adequate internet-based trading platform that has been developed within the scope of this study, is supposed to establish contacts between providers of conflict-free minerals and the respective buyers.
The study identifies seven major trading platforms that can be used for trading selected commodities. Three platformsare currently being used for trading these commodities: the chinese platform Alibaba, the US-american Spot Metalls Online and the canadian platform Worldbid. The remaining platforms are currently not being used for trade of commodities. Thus, the commodities trading platform market can be regarded to be consolidated at the moment, even though only a small amount of commodities is currently being traded on the active platforms.
The study has developed “success factors” for web-based commodities trading. The evaluation of these factors has shown that the trading platforms are in principle applicable for commodities trading, with the major constraint for application on a larger scale being the limited availability of IT infrastructure, especially on the commodities supplier side; but this might change in the near future. Given the difficulties of establishing a completely new trading platform in a mature market, the feasibility of establishing internet-based trading platform should be researched by in-depth investigation of existing platforms.
At the current market situation, two platforms would be considered suitable for further analysis:
- The Spot Metals Online platform offers an active and well frequented contact platform – though not being maintained for ten years. Its structure is simple and transparent and the commented form for entering offers provides all information necessary for setting up detailed offers.
- The Alibaba platform appears more complex and modern and offers more comprehensive trading information and numerous tools for novice users. The complex structure requires some training, but the platform provides sufficient user guidance as well as a comprehensive search tool to assist inexperienced users. The certification of conflict-free raw materials could also become a certification of the credibility of commodity providers; the certificates could easily be published in the offer description. By using the Alibaba platform for a “test-run” of commodity certification, the international popularity of the platform could also benefit the certification initiative and thus would the awareness for the importance of a sustainable and ethically responsible production of raw materials.