Hungary threatens clampdown on EV battery industry after pollution case

By Gergely Szakacs

BUDAPEST, July 2 (Reuters) - Hungarian Environment Minister Laszlo Gajdos has threatened to close factories in the EV battery industry that fail to abide by environmental regulations, marking a major policy shift from right-wing leader Viktor Orban, who lost power in April.

From 2021 Orban bet big on EV batteries, attracting foreign investment worth around €26 billion ($29.7 billion), based on a government tally, mainly from South Korean and Chinese manufacturers, and making Hungary a significant hub in Europe.

But environmental, health and safety concerns around the plants surfaced as a key issue ahead of the election, where centre-right rival Peter Magyar, who pledged to take a tougher stance on the sector, defeated Orban in a landslide.

"We must restore the balance between industrial development and environmental protection," Gajdos said in a Facebook post late on Wednesday. "In the past 16 years, this balance has entirely tilted over in favour of industry."

"Those repeatedly violating regulations, jeopardising the health and safety of Hungarian people and ignoring Hungarian laws have no place in Hungary," he said, promising to raise pollution fines to what he called Europe's strictest levels.

CHINA'S SEMCORP, CITY MAYOR UNDER PRESSURE

On Wednesday, Laszlo Papp, mayor of Debrecen and a member of Orban's Fidesz party, called on Chinese battery parts maker Semcorp to leave Hungary's second-largest city due to recent findings of environmental pollution.

The regional government office suspended Semcorp's production licence in late June after authorities found large-scale aluminium pollution in water samples taken from monitoring wells around the plant.

The Hungarian management of Semcorp, which makes lithium-ion battery separator films and aluminium plastic films, did not immediately respond to emailed Reuters questions for comment.

In a statement to state news agency MTI, Semcorp said it had launched a full-scale enquiry to determine the causes of the pollution.

Zsolt Tarkanyi, the Debrecen lawmaker of Magyar's Tisza party, said on Facebook that the city mayor should resign after the revelations, a call endorsed by Magyar with three victory signs under the post.

"We might call (Papp) the patron saint of battery factories," Magyar told a news conference, saying he helped pave the way for large-scale EV battery projects in Debrecen, a former Fidesz stronghold, despite opposition by local residents.

The Debrecen mayor's office did not immediately respond to emailed questions about Magyar's call for Papp to quit.

Tisza's popularity has increased further since the election, with a Median survey showing it is backed by 73% of decided voters compared with 21% for Orban's Fidesz.

($1 = 0.8757 euros)

(Reporting by Gergely Szakacs; Editing by Kate Mayberry and Emelia Sithole-Matarise)