Battery manufacturer LG Energy Solutions (formally LG Chem) has recalled a suite of household batteries after concerns they "may overheat and catch on fire". It is understood more than 5,000 units have been pulled.

Hyundai has also pulled the batteries from almost 1,000 electric cars from the Australian market as part of a global recall, again amid concerns that they may lead to an electrical short and "Start a fire".

It has been revealed that thousands of these products are now starting to be processed by battery recyclers in Melbourne.

Processing the lithium-ion batteries inside these products is a new and complicated task for the Australian recycling industry. They come with a fire risk, contain potentially toxic yet valuable minerals, and are hazardous to the environment if dumped inappropriately.

Projections are that this waste stream will soar in coming years, and there are currently no overarching rules on how companies, consumers or recyclers should manage it.

What's happening to the recalled cars?

Hyundai's confirmed that the lithium-ion polymer batteries from its recalled Kona and Ioniq cars in Australia are going to Melbourne recycler EcoBatt.

How is EcoBatt to see how it was dealing with these emerging waste streams?

Armed with power tools and a fire extinguisher nearby, its workers pulled apart a battery from a Hyundai that was the size of a dining table and broke it down into the small silver lithium-ion cells inside.

EcoBatt's been recycling the smaller sorts of batteries inside electric appliances, which are generally lead-acid based, for years.

The recycler's operation manager, Jason Zorzut, explains that the type of battery inside EVs are a newer endeavour for them.

"Obviously, due to their size, it's a lot more work to break them down to a point where we can actually process them," he says.

"There's other inherent risks with lithium batteries, and especially with the size in case of fires and thermal runaways. So we do need to be very careful in the way we handle them and dismantle them."

Jason says the company had been planning for this waste stream to start coming to them in the next few years, but the recalls have meant it's arriving early.

Around 31,000 home battery storage units were sold last year in Australia, while the number of EVs was much smaller at 6,000.

Most of the batteries inside these come with expected lifespans of between five and 10 years, although that's increasing as technology improves.

In a recent report on the issue, the CSIRO projected the waste stream from EVs alone could reach 180,000 tonnes by 2036 in Australia.

One of its lead authors, Thomas Ruether, explains the complex issues around dealing with this emerging waste stream and ensuring it doesn't end up in landfill.

"What sets lithium-ion batteries apart from the majority all other battery types is the electrolyte system used," he says.

"The electrolyte system consists of flammable and combustible organic solvents in which a lithium salt is dissolved, which is not only corrosive and toxic but releases hydrofluoric acid when in contact with water.

"Many batteries will still contain a considerable amount of residual energy, in particular larger packs such as electric vehicle lithium-ion batteries, and hence present a hazard due to the risk of short-circuiting and electrocution during handling, transportation and storage.

"This year alone, multiple fires caused by battery waste have been reported in the media and by fire brigades."

EcoBatt's founder Doug Rowe is particularly concerned about safety issues. The company just brought in a shipping container specifically designed to hold an electric car battery while being stored, to prevent it blowing up and starting a fire.

"It is a new and high-risk business when not done with the correct safety equipment, and few know exactly what the best way is to handle and process these batteries," Doug says.

Fire risk a very real one in this industry:

Dealing with fires is something Envirostream has particular experience with – one of its factories was engulfed in flames in 2019.

The official fire report into the incident — sighted by ABC News — found the most probable cause of the fire was a short-circuit between batteries that were sitting in storage to be recycled.

"We now have fire liners in all collection in retailers and loads are reduced from 200kg per drum to 15kg or less per box," Envirostream's managing director Andrew Mackenzie said.

"We have to accept there are lessons to learn with new products, unfortunately."

The recycling business is owned by ASX-listed company Lithium Australia.

Like EcoBatt, it started off with smaller batteries. But Envirostream is starting to see a rise in lithium-ion batteries from home storage units that reach end of life or break down and cannot be repaired. 

It is also currently handling the recycling of the home energy storage batteries that have been recalled by LG Energy Solutions. It also has the contract for dealing with the batteries inside Mitsubishi's hybrid cars, when they reach end of life or are involved in an accident.

Reporters visited the Envirostream facility in Melbourne and saw battery units inside plastic casing being fed into a compactor.

Battery units with a bit of energy inside them let off power as they're shredded, with the resulting material coming out warm and steaming. This material is then fed into another machine, which separates the elements further using water and processing.

Envirostream doesn't charge companies to take their batteries, with the company's head of commercial Max Lane explaining that it makes money by on-selling the precious materials it recovers.

"We typically recover over 90% of all battery materials for downstream reuse," he says.

"Depending on the casing and housing materials used this figure can be over 95% for some battery types."

Max says the most valuable product is the mixed metal dust.

It contains the main cathode and anode materials that make batteries work, including lithium, nickel, cobalt, manganese and graphite.

Because there are no lithium cells being made in Australia, Max explains that this mixed metal dust is shipped overseas to be made back into new batteries.

"Most of our output currently goes to South Korea," Max says.

"Copper, aluminium, steel and recyclable plastic are separated and sent to local Australian recycling downstream processors for recycling and reuse in various applications."

EcoBatt follows a similar process.

However, it charges companies to take their waste, as it is still grappling with how to make money off the materials by on-selling them on global markets. The price of what global markets will pay for core minerals fluctuates, making planning even harder.

"There's a lot of work involved in pulling the part when it comes to labour and mechanical processing of these," EcoBatt's Jason Zorzut says.

"Sometimes the cost of refining a battery down to get the raw material back well outweighs the cost of pulling it out of the ground and mining it as a raw material.

"We're looking at other markets and other ways that we can refine it down further and get a better more purified product at the end of the day to obviously get a better return for it."

What about Tesla and other major brands?

Along with Hyundai and LG, prominent industry leader Tesla has confirmed that it uses a local recycler for its home storage battery units and electric cars in Australia.

It has also confirmed it'll use that local recycler to manage two Tesla Megapack batteries that went up in flames in Victoria this year (See video).

ABC News approached various other brands in the electric car and home storage space to find out their policies for what happens to their products when they fail, break or reach end of life.

Volkswagen Group confirmed that it uses EcoBatt to recycle Audi batteries, and that it will also have a similar scheme for VW when it launches full electric cars here next year.

German household battery maker Sonnen confirmed it supported end-of-life management for its batteries in Australia, but didn't specify exactly what it had committed to doing.

Redback – which makes home storage units – said much of its e-waste components were sent to be recycled in Queensland. However, its actual battery cells, which are imported from China, were sent back there if they failed.

"Redback Technologies don't manufacture batteries and the batteries used are returned to the manufacturer at the end of their life," a Redback spokesperson said.

Video | Fire broke out at the site of a Tesla lithium battery project which could soon be the country's largest.

Story By | Emilia Terzon