Finished Lubricants

A Thinning Slate of Thickeners?


Theres good news and bad news regarding lubricating greases and the European legislation known as REACH, Registration, Evaluation and Authorisation of Chemicals.

REACH requires manufacturers to evaluate substances in their purest form for their effects on human health and the environment, and then to register each substance for ongoing use in the European Union. No registration, no market pretty much sums up the fate of products that fail to comply, including essential components for making lubricants and greases.

The good news is that a group of key chemicals needed to make lithium grease thickeners – fatty acid (C12 to C22) lithium salts, including lithium 12-hydroxy stearate – met the recent May 31 registration deadline for substances made or imported to the EU in the range of 100 to 1,000 metric tons a year. The registration of these precursors was achieved by a consortium of dozens of EU and international companies, which worked together and shared the substantial testing and evaluation costs.

Europe makes and imports an estimated 110,000 tons of lithium grease a year, representing over 70 percent of its total grease appetite. So this cooperative effort helps assure EU grease sellers theyll have access to critical raw materials – and means buyers will continue to get their favorite grease products.

The not-so-good news: Hundreds more grease thickener types still await registration, and their producers face mounting costs for compliance by the next deadline of May 2018. Many of these thickeners are reacted in small batches, or have only one or two companies to share the evaluation costs and champion their registration. With such small volumes at stake, the business case for completing the registration process will have to be weighed very carefully, one substance at a time.

4 Million and Counting

Most grease is created by reacting together raw materials in situ, and these materials likely are going to be subject to REACH. They include soaps made by reacting a fatty acid and metal hydroxide; benzoates; sulfonates; and polyureas.

The next deadline for REACH registrations, May 2018, covers substances produced or imported in the range of 10 to 100 tons/year, points out Andreas A. Dodos of Eldons S.A., a family-owned lubricant and grease company headquartered in Athens, Greece. Since 2010 Dodos has chaired the group of grease companies and suppliers called the European REACH Grease Thickener Consortium, which originated with the European Lubricating Grease Institute but is now an independent entity. The consortium so far has spent six years and more than 4.3 million on REACH, with more to come.

Working in task forces dedicated to specific groups of chemicals, the consortium is shepherding the most broadly used grease components through the registration process. After lithium salts, these include chemicals needed to make calcium, aluminum and polyurea thickeners. Around 40 companies, for example, were involved in the task force working to register fatty acids of lithium salt for this use, 30 agreed to pool efforts on calcium salts, and 10 companies got involved in aluminum benzoate registration. Calcium soap greases are the second-most popular in Europe, a bit under 10 percent of this market, and aluminum soap greases account for another 6 percent.

Just how much grease is actually made and used in Europe? According to NLGIs Grease Production Survey, Europe makes about 17 percent of the worlds annual grease output of 2.5 billion pounds. And the market research firm Kline & Co. pegs EU grease consumption at 22 percent of the global total, said Dodos.

Some 500 substances are used as grease thickeners, and each one will require evaluation either individually or in groups, if they are to continue to be sold in Europe after the 2018 deadline, Dodos said in June to the annual meeting of the National Lubricating Grease Institute in Tucson, Ariz.

The consortiums success with registering lithium salts required hard work by its members, Dodos pointed out, which included diving into the arcane REACH regulation itself. If you try to print out the REACH regulation, its like printing the yellow pages, he said. Its 800 pages long; actually 300 pages plus 500 pages of tables and data sheets.

As well, Europes registration scheme is being taken up elsewhere, and a number of countries have introduced their own statutes on chemical evaluation. These range from China to Turkey and from Japan to various U.S. states. So the registration efforts under way by the consortium in Europe could be just the first step on a long path around the globe.

Investing in Compliance

How much does it cost to register a single substance under REACH? Thats not easy to answer, Dodos said. To manage costs, the consortium took a category approach to chemicals, grouping them into families of substances having similar chemical, toxicological and eco-toxicological characteristics. The majority of REACH costs are one-offs, he said, such as paying for tests, writing dossiers and registration fees that must be paid to the European Chemicals Agency.

Consortium members have been able to spread these costs out over time, as testing progressed. Companies that are not members of the consortium also can obtain and use the consortiums chemical testing data via a Letter of Access – but they must pay for this data just prior to registration, incurring the charge in a single budgeting period, Dodos noted. Its expected that some of the consortiums expenses will be recouped through sales of these Letters of Access.

Dodos went on to offer a closer look at the costs, using as an example the most commonly identified substance used as a grease thickener: lithium 12-hydroxy stearate. Estimating that Europe makes or imports about 110 tons a year of lithium greases, which contain an average 7 percent of soap content, the grease thickener consortium calculates that on a continent-wide basis, it has spent an average 15.8 per ton of lithium grease produced in Europe.

That broad cost picture shifts though, for each manufacturer or importer. Companies producing or importing 100 tons of the substance per year could see testing and evaluation costs averaging 28 per ton, while those with only 10 tons to register could spend five times more – an estimated 140 per ton – because they have fewer tons over which to spread the cost. For lower tonnage manufacturers, the cost per ton is significantly higher and could affect market strategies, considering that lithium based greases today are commodity products, said Dodos.

Those estimates, he added, do not include company-specific activities, such as actual REACH registration fees that must be paid, internal inventory reviews, exposure scenarios that must be developed, dossier maintenance and other expenses. As a rule of thumb, you have to add 35 percent more to the per ton cost for companies at the higher tonnage bands, and 50 percent more for those in the lower tonnage bands, Dodos advised.

Other types of chemicals investigated, like calcium salts and aluminum benzoate, may cost even more to register on a per ton basis. This is mainly because the tonnages sold are much smaller than with lithium greases, and many fewer companies shared in their evaluations. Consortium costs allocated so far to calcium salts have amounted to an average 10.4 per ton of calcium grease produced in Europe, and the cost for aluminum benzoate salts averaged a hefty 73 per ton of aluminum complex grease.

How will companies cover these costs? In the case of calcium greases, some might choose not to, Dodos indicated. The sales price of many products in this category is significantly lower than that of other thickener categories, so this could be a barrier, particularly for products imported to the region.

Also, although aluminum complex greases are considered to be premium products for the industry, and customers will pay a premium price for them, the available margin could be significantly affected by the cost of REACH implementation, Dodos said.

Register Early and Often

As they brace for the next round of registrations, Dodos said, Each company needs to formulate the strategy that best suits it. First, grease producers need to decide which substances will be crucial to their business. They next must decide whether to pursue registration through a consortium or, if they can afford it, to simply buy a Letter of Access to get the evaluation data they need.

In both cases, the cost will be effectively the same, as all costs are split in a fair and transparent manner between all registrants, Dodos noted. The difference is the degree to which an organization can control the process, and the way resources of both time and money are committed.

Companies with large numbers of substances to be registered in 2018 probably wont want all their registrations to coincide, and could instead take a stepped approach, Dodos suggested. For example, a company with 10 substances to be registered by May 2018 may find it easier to register two substances annually and avoid the cash rush at the end, even though there is no regulatory requirement to register early.

Two other benefits to planning ahead: First, the registration fees have gone up before, and are likely to do so again, so early registration will avoid higher fees. And second, he added, being able to demonstrate early compliance to customers or local authorities may confer some marketplace advantage.

Money vs. Control

Grease producers may ask, What amount of money do I need to put aside for grease thickener registration? but its not as simple as that, Dodos said. Youll have to evaluate them one thickener at a time, and then decide which products merit the investment.

The next scheduled deadline, May 2018, includes all substances produced or imported by a legal entity to the EU in volumes between 1 and 100 tons/year. In looking at that date, Dodos said grease makers need to keep two factors in mind:

Significantly more substances will need to be registered in 2018. In fact, only eight substances were in the 100 to 1,000 tonnage band covered by the 2013 deadline. That leaves over 490 substances to be registered by 2018.

Large numbers of the remaining substances are made by three or fewer companies, or only one. These producers will face steep testing and registration costs which may be hard to swallow on a per-ton basis.

For non-consortium members, the coming costs can create a cash-flow issue, as the next registration deadline nears, he emphasized at the NLGI meeting. Such companies will have to pay the bulk of their registration costs in a single budgeting period, as one big gulp. The advantage to non-consortium members is that they may be bearing much less risk right now. They can wait, and then decide not to proceed with the product. When the May 2018 deadline hits, though, theyll need to drop the unregistered substances from their EU offerings.

As some substances fold up and exit the market, theyll leave a void that others can fill. This could create new niche markets for those organizations brave enough to embrace them, Dodos said. It is a case of turning a disadvantage into an advantage.

The impact of REACH is by no means over, he concluded. Important decisions will have to be made on the viability of particular grease thickeners, making the market that much more competitive.