In a significant regulatory development, the European Union (EU) has approved the European Batteries and Waste Batteries Regulation at its plenary session. The legislation, designed to bolster the requirements around the circular economy and environmental impact of batteries, aims to promote the collection of waste batteries and the reclamation of raw materials, as well as regulating the distribution of raw materials for battery production.
Industry insiders, including KOTRA, advise that this development necessitates diligent preparation, given it implies increased scrutiny of the social and environmental risks associated with Korean battery companies operating within Europe.
Presently, Hungary is home to the most significant number of Korean companies in Europe, housing industry giants like Samsung SDI, SK On, Ecopro, Dongwha Electrolite, WCP, and Sungil Hitech. Investments from these entities already run into trillions of won.
Kamilla Szandrocha, the founder of Central European consultancy CEIS and former head of the Hungarian Investment Promotion Agency (HIPA) and its predecessor, the Trade and Investment Agency (ITD), stressed the need for adherence to local labour laws and effective communication with local governments and residents.
“Electric vehicles and batteries are global trends,” Szandrocha noted, “but environmental and labour-related issues are inevitable due to the nature of these material and resource-intensive industries.”
The case of China’s CATL serves as a potent reminder of such risks. The company encountered significant setbacks in the construction of a plant in Debrenze, Hungary, following failure to properly engage with local residents. A public hearing even culminated in physical clashes between supporters and opponents, raising fears that a factory worth $7.8 billion may face decommissioning.
Workforce supply remains a challenge as well. Companies often struggle to source local workers in Hungary, typically relying on labour from neighbouring countries including Ukraine and Slovenia. Samsung SDI’s Hungarian subsidiary, for example, partnered with the Philippine Overseas Employment Agency (POEA) to hire Filipino workers in Hungary.
Despite these challenges, Szandrocha remains optimistic about Hungary’s investment environment, noting its relative attractiveness compared to other European nations. She advises that Hungary and Poland offer beneficial conditions for R&D and high-tech industries, while for simple production plants, Serbia might present a superior choice due to its lower wages and proximity to Hungary.