The Potential Impact of REACH on Passive Components—the EU’s Draft Directive that WILL Affect You

What REACH Is…
Registration, Evaluation, and Authorization of Chemicals, which is popularly known as REACH, is the European Union’s new draft directive for a “New” EU policy that will do away with the 40 individual legislative policies that currently govern chemicals in the European Union. The new legislation will create a single system for registration, evaluation, and authorization of all metals consumed. The primary goal of REACH is the protection of the environment and corresponding human health; the easy access to chemical toxicity data by the general public; and the proliferation of this ideal throughout the world by leveraging their position with existing and potential trading partners in the World Trade Organization.

REACH Impact: An Overview
REACH is coming in 2007 and will be encouraged for acceptance by the European Union throughout the world, using REACH to further create a cleaner, safer European environment. This will impact all chemicals and metals used in passive components from before 1981. Some exemptions, such as polymers, seem to boost a portion
of the industry, while other industries, such as aluminum, nickel, and copper have already begun massive toxicity data tests as individual industries and consortiums to satisfy REACH registration and compliance before 2007. This bodes well for aluminum capacitors and ceramic capacitors. The cost to the raw material vendors will be significant, and based upon the sustainability of data, will impact the passive component supply chain and beyond into the greater high-tech economy. Importance of the 1981 Cut Off Date For EU New Chemicals Policy:

REACH legislation requires that all EU manufacturers and importers of chemicals that had been on the market prior to September of 1981 comply with REACH under the “no data, no sale,” green policy throughout the EU. Thus, in the passive component supply chain, those chemicals that make up the capacitors, resistors, and inductors that would be affected would be numerous because many of these chemicals are still in use. However, even with the many chemicals involved in the production of passive components, there is an equal number of arguments for exemption. What Passive Component Manufacturers include 3) the identity of the manufacturer or importer; 4) the chemical substance identity; 5) information on what it is used for (90% by weight); 6) Classification and Labeling; 7) guidelines for its safe use; 8) a statement on vertebrate animal testing; and 9) proposals for further testing. Downstream users of the chemical substances are required to visually inspect the REACH data dossier and ensure the material is the right chemical substance for their use and then once the substance has been established as part of the production process, the handler must ensure that the proper safety procedures are met to deal with the chemical substance. Additional documentation, including material data safety sheets, intended use documents, exposure scenarios, safety assessment, and risk management data must be added to the chemical as it is moved downstream from its primary chemical form. Rough, unguided estimates for the costs associated with each metal and chemical substance are approximately $3.5 to $6 million USD per chemical substance in the passive component industry alone. These estimates are based upon those made by the consortium of tin suppliers, who estimate that costs associated with tin usage in electronics (the material of choice to replace Pb in component terminations) will be between 3 and 5 million Euros worldwide. This cost will be divided up among increased personnel for data collection and entry at both the raw material level and the component level, with engineered raw material vendors carrying the larger part of the burden of collecting data on toxicity.

Costs of REACH to the Passive Component Industry:
The costs of REACH to the passive component industry will be high, and will come directly from the bottom line, or the cost will be successfully transferred up the supply chain. The most costly portion of REACH will be the toxicity data collection. For certain large volume materials covered under the REACH program a substantial amount of toxicity data has been collected through trade associations and industry consortiums, certainly for metals and alloys consumed in large volumes which meet the initial REACH criteria of consumption greater than 1000 tonnes, which had been in existence before 1981. Metals that are of extreme importance to the passive component industry, such as aluminum, nickel, copper, and zinc have already begun massive international concerted efforts to collect data on human health and ecological issues associated with these specific non-ferrous metals.

Aluminum is, of course,the dielectric consumed in aluminum capacitors, so there is a significant amount of data already being generated; nickel and copper are consumed in ceramic chip capacitors for electrode and termination respectively, and these will be directly affected; but once again, a substantial amount of data collection is already underway involving these metals in preparation for the enactment of REACH. EU officials likewise are encouraging the international community to adopt REACH-like measures, and to begin data collection in areas where little data collection on chemical substances has been done and where the effects on human health and the environment are not known or transparent to the general public. EU officials are also encouraging manufacturers and importers of chemicals to begin data collection processes for chemicals consumed in quantities less than 1 tonne and in existence since 1981, thus preparing themselves early for the REACH legislation. Without concerted efforts, the burden of individual materials vendors to the passive component industry may become dramatic, and costs required for funding toxicity studies could become burdensome. These costs will either come from profits or be transferred up the supply chain along with the REACH dossier for further scrutiny and documentation.

Potential Scenarios for Confusion and Conflict:
Certainly since the REACH legislation will be enacted over time based upon tonnes consumed, there will be many instances where only a portion of the materials contained will be required to have full data collection and exposure. For example, a palladium + silver electrode consumed in MLCC would be responsible for full data collection and reporting on the silver by 2007, but not necessarily on the palladium until 2010.

REACH draft legislation requires that all manufacturers or importers of chemical substances already on the market prior to September of 1981 collect as much human and environmental health risk data as possible
on each chemical they manufacturer or import for consumption. The data will be used by the manufacturer or importer to manage the potential risks of the chemical, and to be forthcoming on the exact nature of its toxicology.

Passive Component Products That May Be Affected:
It is difficult to say with certainty which passive component parts will be affected and which ones will not, but based upon my analysis itappears that the process will separate more advanced components from less advanced components. A closer look at some products may shed some light—
• Tantalum Capacitors: Currently, as the draft exists, all metals and alloys are included, but there is considerable movement to get large tonnage materials taken off the list. Both petroleum and polymers have been taken off the list, so other industries, with emphasis upon non-ferrous and non-noble metals, are compelled to get their materials taken off the list. Tantalum will certainly be scrutinized regardless as it has been in use by telephone companies as valve block capacitors since the 1960’s. However, the cathode material, based upon traditional manganese nitrate chemicals, would also be subjected to REACH. However, as I understand it, tantalum capacitors using conductive polymer would not have to comply with REACH for the cathode, but only for the tantalum anode–so this suggests a flawed system, where part of a material joined with another material may mean that toxicity data is required for one part of the chemical but not the other.
• Tantalum Nitride Resistors: Theoretically TAN thin film resistors would be exempt, as would hafnium diboride resistors. The use of silicon substrates for TAN film would also be exempt. These tight tolerance resistors would be exempt from REACH registration.
• Nichrome Film Foil and Wire: Nickel Chromium materials, which have been in use since before 1981 as resistive elements on alumina ceramic cores, would be subject to substantial data collection. Separate reporting would be required for nickel and for chromium–and then as a combined film, foil, or wire.
• Aluminum Capacitors: These would be keenly affected by REACH legislation as etched anode and cathode foil with chemical liquid electrolyte has been in existence since the first television sets were manufactured in the 1940’s. Once again, the cathodic bath chemicals for etching the foil, and of course the liquid electrolyte, would be subject to REACH. However, electrolytes developed after 1981 would not be affected, and neither would the conductive polymer aluminum capacitors. Fortunately for aluminum capacitor vendors, the aluminum industry as a whole is already collecting data in anticipation of REACH and said information, theoretically, will be available to the aluminum capacitor vendors– thus limiting their workload.
• Ceramic Capacitors: Since ceramic capacitor manufacturers mix chemical slurries and employ chemical pastes for electrode and termination, it is interesting how this might affect the ceramic capacitor industry. Basically, the barium carbonate, titanium dioxide, and barium titanate materials would not be exempt, as they would have been used in through-hole ceramic capacitors prior to 1981. Also, products containing palladium +silver would have to be documented because of their large volume use prior to 1981; ceramic capacitors using nickel and copper would have large data collection accomplished by the supportive industries and their related associations.
• Film Capacitors: This is an interesting issue with respect to film capacitors because polymers are exempt. Thus, DC film capacitors are also exempt to some degree. This legislation, in some ways, favors DC film capacitors at the expense of other dielectrics. AC Oil filled polypropylene capacitors no longer use PCB electrolytes, so they may also be exempt, although some of the motor run and microwave oven capacitors may contain chemical electrolytes that would have been in use prior to 1981. There are many alternative electrolyte solutions that have been developed after 1981 that could easily be used.
• Magnetics: The primary building block for ferrite beads and bead arrays, chip inductors, and ferrite cores has been iron oxide, although in certain instances, variations of ceramic dielectric compositions are employed. Regardless, magnetics will probably have to spend the most money for data collection on this subject because so little data exists.

Timeline for REACH Implementation:
It is believed that REACH will begin implementation sometime in 2007 and will begin with large quantity substances manufactured or imported weighing 1000 tonnes or more. This process should take three years. In 2010 registration for chemical substances manufactured or imported is required for products consumed in quantities of 100 tonnes or more, and between 2013 and 2018 the registration of substances with consumption volumes of 1 tonne or more.

Requirements and Sustainability of REACH Data Collection:
REACH requires that vendors at each stage of the supply chain add data to the chemical as they increase its value,
and then by nature, add to its toxicity, so at the end of the electronic lifecycle, a massive quantity of environmental and human health risk data would have been collected and documented.

There are nine data points required for each individual chemical at each stage of the value-added process. The vision is that at each stage of engineered material production an additional dossier will be attached to the
chemical as value and toxicity become layered to form a finished black box appliance. In terms of man-hours required to collect this data and keep it organized, the most expensive and time-consuming data for manufacturers and importers to develop will be 1) Summaries of Annex V to IX Toxicity Data and 2) Studies of Annex Toxicity V to IX. Other dossier requirements are more basic, of course, and would include 3) the identity of the manufacturer or importer; 4) the chemical substance identity; 5) information on what it is used for (90% by weight); 6) Classification and Labeling; 7) guidelines for its safe use; 8) a statement on vertebrate animal testing; and 9) proposals for further testing.

Downstream users of the chemical substances are required to visually inspect the REACH data dossier and
ensure the material is the right chemical substance for their use and then once the substance has been established as part of the production process, the handler must ensure that the proper safety procedures are met to deal with the chemical substance. Additional documentation, including material data safety sheets, intended use documents, exposure scenarios, safety assessment, and risk management data must be added to the chemical as it is moved downstream from its primary chemical form. Rough, unguided estimates for the costs associated with each metal and chemical substance are approximately $3.5 to $6 million USD per chemical substance in the passive component industry alone. These estimates are based upon those made by the consortium of tin suppliers, who estimate that costs associated with tin usage in electronics (the material of choice to replace Pb in component terminations) will be between 3 and 5 million Euros worldwide. This cost will be divided up among increased personnel for data collection and entry at both the raw material level and the component level, with engineered raw material vendors carrying the larger part of the burden of collecting data on toxicity.

Costs of REACH to the Passive Component Industry:
The costs of REACH to the passive component industry will be high, and will come directly from the bottom line, or the cost will be successfully transferred up the supply chain. The most costly portion of REACH will be the toxicity data collection. For certain large volume materials covered under the REACH program a substantial amount of toxicity data has been collected through trade associations and industry consortiums, certainly for metals and alloys consumed in large volumes which meet the initial REACH criteria of consumption greater than 1000 tonnes, which had been in existence before 1981. Metals that are of extreme importance to the passive component industry, such as aluminum, nickel, copper, and zinc have already begun massive international concerted efforts to collect data on human health and ecological issues associated with these specific non-ferrous metals. Aluminum is, of course, the dielectric consumed in aluminum capacitors, so there is a significant amount of data already being generated; nickel and copper are consumed in ceramic chip capacitors for electrode and termination respectively, and these will be directly affected; but once again, a substantial amount of data collection is already underway involving these metals in preparation for the enactment of REACH. EU officials likewise are encouraging the international community to adopt REACH-like measures, and to begin
data collection in areas where little data collection on chemical substances has been done and where the effects on human health and the environment are not known or transparent to the general public. EU officials are also encouraging manufacturers and importers of chemicals to begin data collection processes for chemicals consumed in quantities less than 1 tonne and in existence since 1981, thus preparing themselves early for the REACH legislation.

Without concerted efforts, the burden of individual materials vendors to the passive component industry may become dramatic, and costs required for funding toxicity studies could become burdensome. These costs will either come from profits or be transferred up the supply chain along with the REACH dossier for further scrutiny and documentation. Potential Scenarios for Confusion and Conflict: Certainly since the REACH legislation will be enacted over time based upon tonnes consumed, there will be many instances where only a portion of the materials contained will be required to have full data collection and exposure. For example, a palladium + silver electrode consumed in MLCC would be responsible for full data collection and reporting on the silver by 2007, but not necessarily on the palladium until 2010.

Viewers Who Read This Article Also Went Here: Additional Resources: (1) Polyethylene Terephthalate (PET) Supply To The Capacitor Industry: 2007-2014 Global Market Outlook ISBN # 1-893211-82-7 (2007) (2) CAPACITOR FOIL: Global Market Outlook: 2008- 2013 ISBN # 0-929717-85-6 (2008) (3) (1) Ceramic Dielectric Materials: World Markets, Technologies & Opportunities: 2008-2013 ISBN # 0-929717-76-7 (2008) (4) TANTALUM: Global Market Outlook: 2008-2013 ISBN # 0-929717-81-3 (2008) (5) Polypropylene Supply To The Capacitor Industry: 2007-2014 Global Market Outlook ISBN # 1-893211-83-5 (2007)

Additional Resources: (1) Raw Material Usage and Supply Markets in The Passive Component Industry (Shenzhen PRC 2009)