REACH at LANXESS

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REACH at LANXESS

• LANXESS Procurement North AmericaThomas J.
  O'Neill CPO

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Agenda
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LANXESS at a glance
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REACH at a glance
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REACH at LANXESS Procurement
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Agenda
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LANXESS at a glance
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REACH at a glance
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REACH at LANXESS Procurement
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Sales in the year 2007
EUR 6,608 bn
Sales thru 3rdQ/2008
EUR 5,114 bn
Employees worldwide (as of 2008-09-30)
14,983
Performance Polymers Advanced IntermediatesPerfor
mance Chemicals
Portfolio
Global orientation
Around 44 sites 21 countries
LANXESS is one of Germanys most important
providers of polymers and chemicals
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Hamm-Uentrop
Birmingham/NJ
Brunsbüttel
Antwerpen
Dormagen
Sarnia/Canada
Marl
Zwijndrecht
Burgettstown, PA
Uerdingen
Leverkusen
Branston
Chardon/OH
Bitterfeld
LaWantzenau
Weifang
Mannheim
Qingdao
PortJérôme
Toyohashi
Baytown/TX
Filago
Vilassar de Mar
Wuxi
Orange/TX
Shanghai
Bushy Park/SC
Lerma
Thane
Cabo de Santo Agostinho
Madurai
Porto Feliz
Rustenburg
Sydney
Isithebe
Triunfo
Newcastle
Merebank
Duque de Caxias
Zaraté
Lanxess Production Sites
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LANXESS has built a strong portfolio with
leadership businesses
LANXESS Portfolio 2008

• 13 Business Units substantially restructured and
  repositioned
• All BUs now occupy leadership positions in their
  markets
• Strategic divestments of four Business Units
• Fibers
• Paper Chemicals
• Textile Processing Chemicals
• Lustran Polymers
• Strategic Acquisitions
• Petroflex
• Chrome International South Africa

Leadership position
Profitability and stability expectation
LANXESS Business Units
Divestments
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Agenda
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LANXESS at a glance
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REACH at a glance
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REACH at LANXESS Procurement
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Registration, Evaluation, and Authorization of
Chemicals (REACH)

• Created a single European Union regulatory
  scheme for all chemical substances.
• Entered into force on June 1, 2007 with 11 year
  phase-in period.
• European companies and non-European companies
  that ship chemical products into Europe, have
  customers that ship products into Europe, and/or
  purchase products from Europe are impacted.
• Industry is given more responsibility. The
  government no longer must scientifically prove
  that the use of a substance is dangerous.
• The chemical industry must demonstrate (in
  conjunction with the user) that the use of a
  certain substance under normal circumstances is
  safe.

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Key REACH Requirements

• Pre-registration Companies pre-register at no
  cost on-line providing basic information on
  substance identity and company. Allows phased-in
  registration and identifies companies that
  produce the same chemical to share information
  and develop joint registration packages.
• Registration Requires submittal of a technical
  dossier with extensive data on the toxic
  characteristics of the substance, which will
  entail substantial testing and data gathering.
  Will be substance specific and chemical
  manufacturer or importer specific.

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REACH - Registration Deadlines
REACH provides an extended time period for
registration only for companies which have
pre-registered their substances
Pre-Registration
1,000 tons per year Carcinogenic, Mutagenic or
toxic for Reproduction 1 ton per year Very
toxic to aquatic organism 100 tons per year

REACH entered into force
100-1,000 metric tons per year
100-1,000 tons per year



1-100 tons per year
June 1,
Nov. 30,
May 31,
May 31,
2008
2010
2013
2018
Dec. 1,
June, 1
2008
2007
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REACH Strategies for Non-EU Companies exporting
to the EU

• Supplier Registration Register via an EU-based
  Only Representative
• or
• Depend on EU based customers to register as
  an importer
• Customer Registration Customer registers as
  importer and has responsibility for REACH
  requirements

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Cost of registration depends on quantities,
properties and uses of the chemicals
if sustances are classified as dangerous
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Registration as Intermediate (Article
18-Certificates)

• Substances declared as intermediates and handled
  under strictly controlled conditions result in
  reduced administrative costs.
• Registration as intermediate can save up to 80 T
  per substance only in administration cost.
• Additional costs for required tests can be
  estimated after gap analysis.

Diff. 80 T
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Agenda
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LANXESS at a glance
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REACH at a glance
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REACH at LANXESS Procurement
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REACH Strategy at LANXESS

• Complete Pre-Registration of the current LANXESS
  portfolio.
• Pre-Registration of substances with possible
  future relevance.
• Pre-Registration of all Raw Materials independent
  of supplier's intention to register.
• Pre-Registration of strategic substances for all
  LANXESS Legal Entities within the EU independent
  of our current production sites.
• For LANXESS Legal Entities outside of the EU,
  LANXESS GmbH acts as Only Representative so
  that they can export into the EU.

Keep every option open
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LANXESS Procurement REACH Implementation
Ensure future delivery of raw materials and
maintain flexibility in sourcing

• Ensure further delivery of raw materials and
  maintain flexibility in sourcing
• Request our vendors intention to pre-register /
  register via a standardized questionnaire
• We expect complete pre-registration and
  registration of all substances supplied by our
  vendors.
• Own Pre-Registration of all raw materials
  (current and future portfolio) independent of
  vendors intention to register
• Enables LANXESS to act as an importer with
  extended registration periods.

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Supplier Survey 2008

An eQuestionnaire-Tool was implemented to ensure
automation of requests and efficient
documentation of supplier replies

• How we minimized open requests
• Vendors who didnt reply sufficiently were
  reminded by an automated procedure.
• Any Open Vendor/Material combinations were
  followed up directly by the responsible
  Purchasers (Business Contacts).

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REACH Supplier Survey (1860 Substances)
REACH compliant substances

No interruption in future supply is expected
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What do we expect from a non-EU based Supplier
and his Only Representative?

• Complete pre-registration and registration of all
  REACH relevant substances delivered to LANXESS
• Written statement that he has appointed an Only
  Representative
• Pro-active information about status and progress
• Cost Transparency in terms of REACH
• All LANXESS applications are to be covered by
  registration

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REACH at LANXESS Procurement Next Steps

• Estimate cost and evaluate impact on supply
  portfolio
• Prepare own exposure scenarios and risk
  assessments to protect Intellectual Property
  in terms of sensitive end-uses
• Consider option to register on our own

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Thank you very much for your kind attention.
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(No Transcript)
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Backup Questions and Answers

What does LANXESS expect from a supplier's "OR"?
Competent preregistration and registration of
the substances to be delivered. The LANXESS uses
should be covered in the Exposure Scenario annex
to the Safety Data Sheet. Will LANXESS show
preference to suppliers that allow you to act as
OR. Have you aggressively marketed your OR
activities and if so - do you have many companies
that have signed on? LANXESS will only act as OR
for own subsidiaries outside the European
Community
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Backup Questions and Answers

Intermediates - are you planning capital
improvements to your facilities so that
intermediates can be rigorously contained? There
should be no need as intermediates are already
handled under safe conditions at LANXESS. In any
case, all intermediates are being reviewed for
REACH compliance. Did LANXESS pre-register
products you purchase? If so, in instances where
several suppliers also pre-register, do you
intend to register? How will LANXESS handle the
next stages LANXESS preregistered all needed
substances as a precaution. Registration will be
done in single cases only, e. g. for possible
imports after cost-benefit analysis.
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Backup Questions and Answers

What is LANXESS doing about products you buy that
were not pre-registered by any suppliers - if
any? LANXESS pre-registered all substances needed
and would be able to act as importer/
manufacturer. How will LANXESS handle SIEF
participation for products pre-registered that
are not produced by LANXESS (this assumes you
have some!)? LANXESS may not be able to provide
information or data from previous studies but we
may have to participate in the costs of future
studies required to register under REACH.
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Backup Questions and Answers

• Is LANXESS doing anything special to protect your
  IP - especially in regards to "sensitive" end
  uses for purchased products?
• Yes, of course, LANXESS may prepare own exposure
  scenarios and risk assessments to protect
  Intellectual Property in terms of sensitive
  end-uses
• Will REACH have an impact on where LANXESS
  sources toll production?
• Maybe any incremental costs for registration
  for toll produced products will have to be
  considered.

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Backup Questions and Answers

Will LANXESS preferentially purchase products
from companies that are pro-active about
REACH? We expect REACH compliance from all of our
suppliers No REACH compliance means no
business. Will you help suppliers comply with
registration by offering to offset the
costs? LANXESS expects competitive raw material
costs, even under the conditions of the REACH
regulation
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Backup Questions and Answers

Supplier survey - were there consequences for no
response? Did you succeed in getting responses
from enough of your suppliers to convince you
that acquiring raw materials will not be a
problem? Based on the results of our survey we do
not expect any future interruptions in supply due
to REACH. How do you intend to handle SIEF
participation - with internal resources or
external resources? Regarding our purchased raw
materials, we are not an owner of data. Therefore
our SIEF activity will be limited. There should
be no need for LANXESS to employ external
resources.
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Backup Questions and Answers

Does LANXESS have the ability to perform
necessary registration testing in house. If not,
how will you go about outsourcing this
activity? LANXESS has arranged contracts with
external service providers to perform any testing
required for registration under REACH.