REACH will cost miners the world over

In 2003, the European Commission put forward a comprehensive plan to reform chemicals policy in Europe under the REACH (Registration, Evaluation and Authorisation of Chemicals) legislation. The regulatory regime aims to provide a harmonized approach to chemicals regulation across all European Union (EU) members and represents a major turning point from the current legislative framework in Europe. Significantly for mining, it will impact on ores and concentrates, as well as alloys and metal products.

It removes the differential treatment between ‘existing’ and ‘new’ chemicals embodied in the current system. In addition, the regulation involves a shift in responsibility from regulators to producers and users of chemicals (and mined products) for the provision of information to support any risk assessmentrequired under the legislation.

REACH will come into force on June 1 this year. International Mining has editorialized on the subject before, but is aware that there are many out there who have yet to fully appreciate the implications to their production costs.

Euromines, the European Association of Mining Industries, Metal Ores & Industrial Minerals notes RAECH “will have a number of implications for the mining industry – for its products and for the products that it uses.” The organization is hosting What you need to DO about REACH: The First Three Years – from implementation to compliance at the Metals Conference Centre, Brussels, January 31 – February 1.

Euromines says the workshop “will provide as comprehensive information as possible on the upcoming obligations for the extractive industry and how these obligations can be met.” Contact [email protected]

In 2005, International Mining reported the Minerals Council of Australia: “the economic modelling indicates that the implementation of REACH legislation has the potential to affect the minerals industry in Australia, primarily through the indirect costs of the proposed legislation. With Australian lead, zinc and nickel industries comprising a small number of relatively large exporters, the compliance costs of the legislation are likely to represent only a small proportion of total industry values. On the other hand, market access restrictions affecting mineral ores and concentrates have the potential to have a larger negative impact on the viability of these industries. The adverse impacts on Australian production and exports are particularly substantial for the zinc industry, reflecting the high export orientation of that industry toward the EU market.”

ABARE’s report also expected REACH “to be detrimental to the Australian economy more generally. Importantly, the impacts on the output and export performance of Australia’s minerals sector, and the associated macroeconomic impacts are moderated to some extent by the redirection of Australia’s exports to other key markets in Asia.”

“Canada, the US, Japan, Australia, Chile, South Africa, Thailand and many others have made and continue to make strong representations about the way in which REACH may affect their exports, their domestic industries, their chemicals and raw materials flows, their trade in manufactured articles and so on,” law firm Burges Salmon reported in 2005.

Cochilco’s (Chile’s state copper commission) Executive VP Patricio Cartagena said: "We are facing direct costs that could range from $1.98 billion in a high restriction scenario to $78 million in a moderate restriction scenario," at a seminar organized by Chile’s national mining society Sonami in 2005. In the high restriction case, Cochilco has assumed that REACH judges all mineral products to have a variable chemical composition. In the case of moderate restriction, none are judged to fall into this category.

The registration process would require chemical analysis of mining products in EU- laboratories. The higher the volume imported, the greater the costs, according to Cartagena. "The main focus of this regulation is the volume of imports and not the risk position [presented by the product]," he stressed, adding that this went against the accepted norm. It is not yet clear who will pay the costs but they are likely to be shared by consumers and producers, according to Cartagena.

Sonami president Alfredo Ovalle said the legislation could "severely limit access" of Chilean mineral products to the European market. However, it is also likely to severely limit the supply of ores and concentrates to EU metallurgical complexes.

Metals are chemical substances according to REACH and thus fall under the proposed registration regime; it is estimated that the regulations will affect more than half of the ore emerging from Africa. Sietse van der Woude, from the South African Chamber of Mines, headed an African delegation that had hoped to win exemptions for African ores and concentrates sent to European plants on the grounds that they are already covered by existing legislation. The EU officials did not agree. They felt that there are many gaps in existing legislation that need to be plugged.

Mining industries around the world are concerned that the REACH legislation will burden their operations with extra costs and bureaucracy. EU metallurgical companies should also be concerned about their feedstock. Perhaps EU consumers should also worry about supplies of metals and minerals.