ELGI Launches Grease Consortium for Chemical Registration


PRAGUE – The European Lubricating Grease Institute yesterday announced formation of a Grease Consortium to share the work and cost of registration and testing of soaps used in grease manufacturing, as required under REACh, the European Unions comprehensive new legislation covering registration, evaluation and authorization of chemicals that will take effect in the spring of 2007. Total cost for REACh implementation has been estimated at 400,000 to 1 million per large-volume substance, and more recently at 20 percent of a small to medium-sized enterprises totalsales for one year.

ELGI President Terry Dicken of Global Lubricants in the U.K. announced establishment of the consortium at the institutes annual general meeting here, and introduced lubricant consultant Mike Morris, who will chair the group.

Thirty three participants, virtually all of Europes grease industry, attended the consortiums preliminary meeting March 22, Morris said, and agreed on the scope of the undertaking. The consortium will agree on the substances (soaps and possibly other substances) to be considered, and it will facilitate and manage the cost-efficient registration and testing of those substances, working within pertinent laws, including REACh and competition law.

Companies qualifying for membership in the consortium are manufacturers of grease soaps in the EU, and importers of soaps into the EU with a legal representative based there. Those representatives, Morris stressed, must have legal responsibility and technical knowledge of the products.

ELGI will bear the initial legal and set-up costs of the consortium, but the continuing costs will be borne by the members. Late entrants are to pay costs as if they were members from the start, plus a 10 percent surcharge to cover indirect costs, Morris said. Issues of financial control and cost recovery are now being defined.

Likewise, the quite horrendous legal issues are currently being addressed, said Morris. Issues of confidentiality, finances, competition law and liability are under review by ELGIs legal counsel, who is drafting a proposed agreement for the consortiums next meeting on May 24.

What is REACh?
BPs U.K.-based Stephen Harley gave an overview of REACh, which establishes a legal obligation to register manufactured and/or imported substances, carry out chemical safety assessments, upgrade safety data sheets, and review and act on information in suppliers safety data sheets. In addition, Harley warned, some substances will disappear from the supply chain. They may be banned entirely or banned for certain uses, or they may be withdrawn by manufacturers for cost burden reasons.

Grease producers will be obligated as manufacturers of substances such as grease-thickening soaps; as downstream users of raw materials, process and lab chemicals, additives, base stocks and formulated products; as downstream suppliers of formulated lubricants; and as importers into the EU.

Once REACh is in place, every legal entity must pre-register its interest in substances that they place on the EU market at volumes greater than one metric ton per year. This pre-registration is intended to facilitate formation of substance information exchange forums like the ELGI Grease Consortium.

Harley pointed out there are some relevant exemptions from pre-registration, including polymers (of monomers that are listed), and substances included in two annexes – including some natural fatty acids and non-dangerous natural substances not chemically modified.

Manufacturers and importers will then be required to register the substances, with timing of registration ranging from three to 11 years, depending on the volume and hazard of the substance. The registration dossier will include a technical dossier and a chemical safety report, including test data, and exposure assessments and risk characterizations for each identified use.

Of importance to lubricant and grease manufacturers, said Harley, is the opportunity to reduce testing costs with read-across data from analogous substances, such as homologous series of fatty acids or different metal salts of the same fatty acid, and by grouping of substances and use of modeling.

Harley underscored the importance of downstream user actions to Europes lubricant industry. The downstream user who purchases a substance (or preparation containing a substance) from a supplier within the EU does not register the substance. But the downstream user should report his use up his supply chain, so the registrant can include it in his chemical safety assessment.

You dont want a nasty surprise if your supplier doesnt include your use in his SDS, Harley said. It is important to ensure your and your customers uses are covered. A downstream user may keep its use a secret from his suppliers, but in that case it must carry out its own assessment and report directly under REACh.

What REACh means, Harley concluded, is that noncompliant chemicals cannot be produced, imported, marketed or used in the EU. If an application is not registered, the substances cannot be used. High-hazard chemicals must be authorized, and there will be restrictions on their use. Expect significantly increased costs on imported products and raw materials. REACh will reduce flexibility and time to market; it will be resource intensive and a high administrative burden. But, he said, compliance is a potential business opportunity. Some [companies] will fall by the wayside so there will be business to be picked up.

Impact on a Grease Producer
Graham Gow of Swedish grease producer Axel Christiernsson International AB described some of the implications of REACh from his companys perspective. Axel manufactures grease in Sweden and the Netherlands, with sales volumes of about 20,000 metric tons per year. The company does not market any brands of its own; all products leaving our facilities carry the brand names of our customers, Gow said.

Issues Gow highlighted included high workload and cost,confidentiality and transparency of the business, possible loss of critical raw materials and/or suppliers, if and what to test, and how to deal with being part of a consortium with competitors and customers.

At last years ELGI meeting, Gow noted, the industry heard from Uniqema to expect direct and indirect REACh compliance costs of 400,000 to 1 million per substance produced in excess of 1,000 tons per year. A KPMG presentation in October placed the total one-off cost for a small to mid-sized enterprise in the region of 20 percent of its total yearly sales.

For a company like Axel, said Gow, transparency is a difficult issue. Some customers dont want downstream distributors or customers to know they dont produce their own in-house greases. Under REACh, this will be impossible to hide. Registrants will most likely not be able to maintain a trade secret in a niche market, he added, and competitors can ascertain the volume/value of market penetration for given companies and products.

But, Gow concluded of the dilemmas REACh will impose, together we will be able to solve these problems. Lithium 12 hydroxy stereate is not rocket science. The ELGI consortium will share the work and the costs to get the most common soaps through the REACh system.

For information on joining the consortium, companies can contact ELGI, headquartered in Amsterdam, the Netherlands,through its web site, http://www.elgi.org/.

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