Hungary has tightened controls on battery plants and related industries following the change of government earlier this year. The new rules provide for a maximum fine of 5 billion forints for serious environmental violations, while the “three strikes” principle will apply in the event of a third violation within five years.
The minimum penalty for a third violation could reach 0.5% of the company’s annual net revenue. Prime Minister Peter Magyar said the authorities would not place investment above the health and safety of the population. “We will not compromise the health and safety of the Hungarian people for any investment or investor,” he said, quoted by Reuters. Tighter controls have already affected several companies. South Korean SK On has been sanctioned for violations related to occupational safety and compliance with the conditions of its environmental permits. EcoPro has been ordered to partially suspend operations at its cathode materials plant in Debrecen, while some of its production facilities later resumed operations after the identified problems were resolved.
The most serious measure has been taken against China’s Semcorp, which produces separator film for batteries. Hungarian authorities have ordered the immediate suspension of production at the plant in Debrecen after identifying deviations from the conditions of the integrated permit for pollution prevention and control.
A groundwater sample from the area showed an aluminum concentration of 2,676,000 micrograms per liter, compared with a permitted level of 200 micrograms. The samples also contained arsenic, zinc, lead, cobalt, cadmium, nickel, barium, chromium, copper, manganese and lithium above the legal limits. The suspension order was issued while administrative and legal proceedings are under way. During Viktor Orbán’s government, Hungary attracted large-scale investments from Asian manufacturers and became one of Europe’s battery production hubs. In Debrecen, CATL is building a complex with a planned capacity of 100 gigawatt-hours. The company has invested in a system to limit water consumption, as the area is among those with limited water resources.
Hungarian authorities warned that future expansions of the plant would depend on strict compliance with environmental requirements and the issuance of new permits. This creates additional uncertainty for automakers that rely on local suppliers and production facilities.
Mercedes produces the electric model from the G-Class family and electric versions of the C-Class in Hungary. BMW produces the iX3 in Debrecen, where it operates on three shifts. BYD has also chosen the country for its first production base in the European Union. The new policy places these investments between the drive for industrial growth and the requirement for stricter control over their environmental impact.