In its haste to turn Hungary into a global battery industry player, the government appears to be turning a blind eye to companies not complying with minimum environmental standards.
Eva Doka, a former teacher and civic activist in the northern Hungarian town of Batonyterenye, has mixed feelings about the government’s grand plans to make Hungary a global player in the battery industry, both in terms of production and recycling.
“It is one thing to produce batteries, but what happens to them at the end of their life cycle? Will we become the battery wasteland of Europe?” she wonders.
It is a question that many of the 15,000 inhabitants of Batonyterenye have been asking themselves recently, as they experience the downside of the “battery miracle” in the country that the Hungarian government likes to promote.
The town is home to a plant run by SungEel HiTech, a leading South Korean company specialising in battery recycling technologies. As demand for lithium-ion batteries surges – 14 times by 2030, according to EU estimates – battery recycling is becoming big business. On the one hand it is essential to avoid creating huge volumes of potentially hazardous battery waste, while on the other hand expensive and rare metals and raw materials such as cobalt, nickel, copper and lithium can be recovered from the waste and reused.
On its website, SungEel boasts of utilising highly innovative and environmentally friendly technologies as well as adopting an ethical approach towards its employees. But the people of Batonyterenye dispute this. The recycling plant, they argue, is neither environmentally friendly nor particularly ethical.
Since SungEel’s Batonyterenye plant opened in 2021 with a government subsidy of 2.8 billion forints (7.2 million euros), the locals have complained about the deteriorating air quality in the area. Rumours have also persisted that the company is storing hazardous waste on the grounds; workers have been visiting local doctors with nasty skin irritations that won’t heal. They also complain that respiratory diseases among the town’s children have increased significantly since the factory opened.
“We are worried,” Doka tells BIRN. “The factory is only a mile away from our kindergarten and school.”\
Concerns escalated in July 2022 when an explosion rocked the plant and a fire spread, injuring three people. This was followed by a fatal explosion in March this year at SungEel’s other Hungarian plant in Szigetszentmiklos, near the capital of Budapest, which killed two workers and injured another.
Toxic waste from the Batonyterenye plant was also found about 50 kilometres away in some abandoned barracks near Abasar, without the knowledge, let alone permission, of the local authorities. Yet no serious criminal charges have been brought.
Operations at the Batonyterenye plant were finally halted in August this year after inspectors from the local environmental authority fell ill following a routine visit, suffering nausea, sore throats and skin irritations. The inspectors complained that the soil reeked of solvents and the odour spread far beyond the factory into residential areas. They also found hazardous waste was being stored without proper permits and that the soil and groundwater were contaminated.
By the time BIRN visited the area, the Batonyterenye plant was closed, but Doka is still not satisfied. “These companies just pay the fines and then do whatever they want,” she sighs.
Indeed, the investigative website Atlatszo reported that the South Korean company has been fined eight times in Hungary and paid out a total of 31 million forints in fines, which is negligible compared to its profits. Last year, the company had a turnover of 18.5 billion forints and a profit of 1.6 billion forints in Hungary, which is fifty times more than the fines.
“I see it as a rather unfortunate trend of certain companies in Hungary,” Gergely Simon, regional toxic expert for Greenpeace Hungary, tells BIRN. “When they see that the fines are low and environmental regulations are not enforced, many simply add the fines to their normal expenses. It is much cheaper than complying with stricter environmental standards.”
SungEel clearly prefers countries with laxer standards: China, Malaysia, India, Hungary and Poland all host the company’s recycling plants. Perhaps not coincidentally, the company had to withdraw its licence application in Germany because its environmental impact assessment plan failed to convince either the public or the environmental authorities there.
BIRN asked SungEel to respond to the allegations, but the South Korean company – which has no proper website in Hungary and no valid telephone numbers – did not reply.
Yet it is not just Asian battery companies that are finding Hungary an attractive place to set up shop.
The Slovenes are coming
The Hungarian public first breathed a sigh of relief when it was announced in August that a Slovenian company, Andrada Group, would be entering the Hungarian market with what it claimed was safe, state-of-the-art battery recycling technology. Slovenia, a member of the EU, has an image in Hungary of being an environmentally friendly country with high and strict environmental standards.
But these hopes were quickly dashed. Andrada, it turned out, was far from a prestigious company with proven technologies that many had been sold on. Instead, it was a brand-new company founded by Slovenian entrepreneurs – Iztok Seljak, manager of Hidria Holding and Hungary’s honorary consul in Slovenia, and Peter Tibaut of the Slovenian battery manufacturer and recycler – that had no reassuring track record in battery recycling.
A local citizens’ group in Alsozsolca, the village where the investment was planned for, raised the alarm, demanding detailed answers about the company’s technology and ownership structure. The unexpected opposition prompted Andrada to withdraw its licence application, at least temporarily, and to request an environmental impact assessment, which to many people’s consternation is not actually required for highly hazardous investments in Hungary.
“We will provide all the necessary information to prove to the locals that our technology poses no threat to their safety and health,” Seljak told local media.
He also argued that the company’s technology is being tested in Switzerland and Germany to safely process and recycle “technical waste” or scrap batteries from Asian gigafactories, which some say could be equivalent to 20 per cent of all the batteries produced in Hungary.
“The problem is that they have absolutely no references,” Gabor Gyenes, a local activist in Alsozsolca, tells BIRN. “They say their technology works in Switzerland and Germany, but there are no companies, there is no proof.”
Gyenes also finds the company’s ownership structure suspicious, noting that it was founded with capital of 3 million forints (7,800 euros) and has already received 4.7 billion forints (12 million euros) in state aid. “Why would the Hungarian state pour so much money into an unknown company?” he wonders.
Many are speculating whether Andrada is a “straw” company for an investor close to the government. Local media in Hungary have reported that one of Hungary’s largest recycling companies, Eltex, is indirectly owned by an investment fund close to Istvan Tiborcz, the wealthy son-in-law of the Hungarian prime minister, Viktor Orban.
BIRN contacted Andrada for comment, who promised to reply, but it had not done so by the time of publication.
Growing local opposition
Prime Minister Orban first rolled out the red carpet for Asian battery manufacturers in Hungary in 2017. His minister of foreign affairs and trade, Peter Szijjarto, declared earlier this year that the country would become the world’s second largest battery producer “when all the announced investments take shape”.
According to S&P Global Market Intelligence, Hungary (with 3 per cent) is currently in fourth place for lithium-ion battery manufacturing capacity after China (77 per cent), the US (6 per cent) and Poland (6 per cent).
Yet parallel to the government’s enthusiasm for the industry, popular opposition to the nascent industry is undoubtedly growing. While the government insists that Hungary should be at the forefront of global technological developments, many are now asking, at what cost?
Local communities, including mayors of the ruling Fidesz party, feel sidelined by the government and are concerned about potential water, air and soil contamination as trust in the environmental authorities is at a low ebb. Concerns are further exacerbated by licences being issued to battery recycling companies, an industry seen as even more hazardous than battery production.
“There is still a lot of experimentation with battery recycling,” Gergely Simon of Greenpeace tells BIRN. “What most of these companies are doing is crushing the batteries into a powder and then extracting the useful metals from that powder, using different methods, but there is no perfect technology. It could mean high contamination risks for the workers and the environment.”
Although the government insists that it requires all players in the battery industry to meet strict EU standards, experts point out that there are no EU-wide environmental standards for the battery industry, only national ones. “Some countries are more lenient than others,” notes Simon.
At the European level, battery recycling appears to be strictly regulated. According to the EU’s new battery regulation approved in July, “extended producer responsibility” means that companies which first make batteries available on the market in a member state are responsible for the end-of-life collection and treatment of the batteries in that member state.
Thus, if Hungary is indeed turned into a battery manufacturing superpower as the government wants, it could also become a battery dumping ground, with the obligation to recycle hundreds of thousands of tonnes of hazardous material, with all the attendant environmental and health implications that would involve.
“From a legal point of view, it is not entirely clear that Hungary would be responsible for the battery waste,” Benedek Javor, Budapest’s Brussels representative and an environmental expert, tells BIRN. “The main responsibility lies with the car manufacturer, who installs the batteries, to collect them at the end of their life cycle. But if the battery recycling capacities are built in Hungary, these companies will bring their waste here for recycling.”
Javor warns that while it is true that there is competition among EU nations for battery gigafactories – though, notably, not for Chinese ones – as electrification gathers pace, there is, unsurprisingly, no competition for attracting battery recycling plants, which is deemed a dangerous and polluting industry. “What we see in Hungary is a textbook case of ecological colonisation, serving the interests of both German car manufacturers and Chinese battery producers,” concludes Javor.
Green policies are not usually at the forefront of Hungarian voters’ minds, but of late more and more local movements are emerging to protest against the potentially dangerous foreign investment and lax environmental standards, putting pressure on some Fidesz mayors to respond.
It remains to be seen whether the pressure will show in the local elections scheduled for summer 2024, but it is telling that the Fidesz mayor of Debrecen, Hungary’s second biggest city and a Fidesz stronghold, Lajos Papp, has publicly warned the government to adhere to stricter environmental standards and enforce laws consistently and rigorously, especially in the battery industry.
Source: Balkan Insigh