Due Diligence for metallurgy: Lessons from digital industries
After 2022, Ukrainian industrial enterprises are faced with a task that was previously solved more by inertia than systematically.: how to quickly and reliably verify a new counterparty if the usual logistics chains and banking channels have stopped working the way they have for decades. Metallurgy and the mining industry are forced to look for new suppliers of raw materials, equipment and logistics services in markets where the reputation of a partner is often known only from open sources, rather than from long-term personal practice of cooperation. Under these conditions, the ability to quickly and competently verify a counterparty has become not a formality for the legal department, but a factor directly affecting the continuity of production.
Why has counterparty verification become critical for the industry
Making a mistake when choosing a supplier or logistics partner is more expensive in metallurgy than in most other industries, simply because of the scale of transactions and the length of production chains. A delay in the delivery of key raw materials for several weeks can stop the entire production cycle, and working with a company that has been sanctioned retroactively or has turned out to be a technical pipeline without real assets creates not only financial, but also reputational and legal risks for the entire supply chain. At the same time, traditional verification methods — personal recommendations, a long history of cooperation, visits to production — work worse and worse precisely when companies are forced to quickly find new partners in unfamiliar markets.
A separate difficulty is that fraud in the B2B segment has become noticeably more inventive. We are talking not only about direct deception with non-fulfillment of obligations, but also about more subtle schemes: companies that present outdated or partially falsified quality certificates, intermediaries posing as official distributors of the manufacturer, legal entities registered shortly before the transaction specifically for a specific contract. None of these signs by themselves proves fraud, but collectively they form a risk profile that is worth checking systematically rather than relying on intuition.
Lessons from highly regulated digital industries
Interestingly, the most developed practices of public verification of counterparties and partners have developed not in heavy industry, but in industries that have historically been forced to combat fraud at the mass, retail level — in fintech and licensed online services, where the stakes for the end user are no less high than for the industrial buyer, simply expressed in other amounts.
