When REACH was being debated prior to its adoption, critics warned that it would create a huge administrative burden – big enough that it would hurt the competitiveness of the regions chemicals industry. Industry insiders say now that those fears are turning out to have been justified.

Companies have had to devote significant resources to learning their obligations under the legislation and keeping up with guidance periodically issued by the European Chemicals Agency, administrator of REACH and other chemicals regulations. Companies also have had to gather information about substances, communicate up and down supply chains about their properties and uses, prepare dossiers and maintain material safety data sheets. In many cases companies have had to conduct tests or propose tests that will be conducted.

Cost Burden

Its a huge administrative burden, said Stephan Baumgaertel, executive director of the German Lubricant Manufacturers Association. Many companies have had to employ new people in order to fulfill their obligations. It costs a lot of money.

How much? That depends on the company, the substance and who one asks. A KPMG study commissioned by the European Union calculated average registration costs of 1.6 million per substance. Andreas A. Dodos, of Athens, Greece-based oil and grease producer Eldons S.A., reported in June that the European REACH Grease Thickener Consortium had spent 4.3 million to test and gather information about compounds used as grease thickeners. The consortium was created and then spun off by the European Lubricating Grease Institute as a way for grease companies and their suppliers to cooperate in the registration of ingredients that they use.

At Junes annual meeting of the U.S.-based National Lubricating Grease Institute, Dodos, chairman of ERGTC, explained that the group identified more than 500 substances that are used as grease thickeners and will need to be registered with ECHA. Most of the 4.3 million was spent on eight thickeners that were subject to a May 31 deadline to register substances supplied in volumes ranging from 100 to 1,000 tons per year. Expenditures by the ERGTC are shared by its 41 members, though Dodos noted that companies will incur additional costs, such as registration fees.

Breaking down the consortiums expenditures, Dodos said it spent approximately 1.65 million on testing and evaluation of lithium 12-hydroxy stearate, the most commonly used type of thickener. Access to that information could amount to 28 per ton for companies producing or importing 100 t/y of the thickener, but for a company supplying just 10 t/y the per-unit cost could be 140, he said. These costs can be a significant percentage of the product profit margin even if the cost is split over a number of operating years, Dodos concluded.

Disappearing Chemicals

There has always been concern that the administrative burden of REACH would cause some materials to disappear from the European market – that suppliers of some chemicals would decide that the costs of registration outweighed the profits they returned and that those suppliers would simply stop offering them. Such developments were seen as more likely with substances traded in lower volumes because lower volumes generally imply less profit and greater susceptibility to cost impacts.

The lubricants market had no significant loss of material availability in 2010, the deadline for registration of substances traded in volumes of at least 1,000 tons per year, sources said, noting that most of the lubricant ingredients fitting into that category were base stocks. Next came the May 31 deadline, and there appeared to be only slight impact on the lubes industry. Ingredients in this category were large volume lubricant additives.

Observers said a few companies halted supply of certain additives but that most of these were still available from other sources. A few resellers disappeared from the market, but we have not seen additives actually become unavailable, Baumgaertel said. Altogether, ECHA reported that it received 9,084 registration dossiers covering nearly 3,000 substances by the May 31 registration deadline. By the end of August the agency found most of those submissions to be in order but had requested additional information from some. As of June 3, a total of 6,598 substances have been registered since REACH took effect.

Industry insiders remain concerned that significant numbers of substances could still be withdrawn from the market at the third and final deadline in 2018. By then suppliers must register substances supplied in volumes of 1 to 1,000 t/y.

For one thing, those substances are traded in lower volumes and, therefore, are more vulnerable, Baumgaertel said. Secondly, the number of materials facing that deadline is much, much greater than the ones that were subjected to this years deadline.

Dodos noted that substances subject to the 2018 deadline generally have smaller numbers of suppliers and users than higher-volume substances. As a result, there will be less opportunity to reduce costs through cooperation. Referring to the hundreds of grease thickeners yet to be registered, he said, The use of a large number of the remaining substances is limited to less than three companies, which means that even if categories can be developed to share costs, a higher actual share of the base set tests … will need to be contributed by each interested party.

Officials from lubricant supplier Fuchs Petrolub AG, of Mannheim, Germany, said some materials are bound to disappear but that users can sometimes do things to preserve availability. The company has previously stated its willingness to take steps such as helping an ambivalent supplier cover registration costs or even purchasing the supply of key ingredients.

In close cooperation with our suppliers, we will be able to find good solutions when necessary, spokesman Tina Vogel said. Additionally, Fuchs research and development team is proactively working on the development of products that contain REACH-compliant materials.

Danger Signs

The lubricants industry may not yet have lost many ingredients because of REACHs administrative burden, but it does appear on the way to losing a few important materials because of concerns that they are dangerous. Boric acid and compounds that contain it have long been widely used as effective and economical corrosion inhibitors in metalworking fluids, but boric acid was added to ECHAs list of Substances of Very High Concern over findings that it is harmful to plants and hazardous to human reproduction.

Under REACH, suppliers of SVHCs are required to obtain authorization to carry them, a process that includes explaining why alternatives cannot be used instead. Ultimately, regulators may restrict the use of SVHCs.

Also on the SVHC list are a number of formaldehyde-releasing compounds used as biocides in metalworking fluids and other materials. First flagged under EUs Biocides Product Directive, these substances make up an easy majority by volume of the biocides used in metalworking fluids, but in the course of killing bacteria they release formaldehyde, which is classified as a carcinogen.

Boric acid will definitely disappear from the market, Baumgaertel said, and the same for formaldehyde. As a result, people are spending a lot of time and effort searching for replacements.

Sources underscored the fact that REACH is just one of numerous chemicals regulations that they have to cope with these days. Europes chemical industry also has the Classification, Labeling and Packaging Regulation, the Biocidal Products Regulation and the Prior Informed Consent Regulation governing the export and import of certain hazardous chemicals. Companies active in other parts of the world also confront REACH-like legislation in other countries, the Global Harmonized System of Classification and Labeling of Chemicals and new regulations in China and Taiwan.

More regulations are on the way, noted Phil Collier, regulatory projects and toxicology manager at additives supplier Infineum. He cited plans for South Korea and other countries to adopt their own REACH-like regulations and the possibility of the United States overhauling its Toxic Substances Control Act. This global trend for the increase in substance regulations will require continued commitment and significant activity by the chemical industry, he said.

Sources for this story allowed that there have been benefits to REACH – chiefly its stated purpose of identifying and eliminating chemical hazards. For the public, REACH is a success, said Baumgaertel, who has been outspoken in pointing out the problems that the legislation creates for business. It has brought greater focus to potential dangers from chemicals and it will reduce risks.

That may provide solace but not much help for businesses that must deal with the legislations requirements and impact.