October 12th, 2010

Toxic Industrial Spill, Ajka Hungary

Posted at 1:00 AM ET

hungarysmallA toxic sludge that poured from a reservoir at an aluminium plant in the Hungarian town of Ajka has killed eight people after more than 700,000 million cubic meters (25 million cubic feet) of industrial waste inundated surrounding towns and villages and contaminated rivers. Officials said a dam wall at the Ajka Timföldgyár plant was breached on October 4, unleashing a two meter (6.5 foot) wave of red sludge that affected 41 square kilometers (16 square miles) of land, including the villages of Kolontar, Devecser and Somlovasarhely. Hungary’s government declared a state of emergency in three western counties of the country after property and infrastructure were damaged. Around 150 people were injured in what officials are describing as Hungary’s worst-ever chemical accident. Those who lost their lives are believed to have drowned and several burns and eye ailments were reported among the injured.

The mud, a residue from aluminium production which is highly corrosive and contains toxic heavy metals such as lead, cadmium, arsenic and chromium, caused massive damage to Hungarian villages and towns close to the plant, as well as a wide swathe of farmland. During a visit to the town of Kolontar, Prime Minister Viktor Orban described the reservoir break as an unprecedented disaster. Prime Minister Orban added that Kolontar may have to be rebuilt elsewhere because the ground was uninhabitable. Around 8,000 people have been evacuated from Kolontar. However, government officials said the spill had not affected the drinking water supply and the food chain was safe.


Hazard data illustrated in the CAT-i map was taken from i-aXs®, Guy Carpenter’s web-based risk management platform. i-aXs users can view impacted areas on any map as well as see how their portfolios were affected. Please contact your broker or Instrat® representative for assistance or go to www.i-axs.info for further information.

The sludge contaminated rivers in the area, including the Marcal River where officials said all marine life was “extinguished”. The toxic spill also reached the River Rába and the Danube, threatening several countries downstream, including Croatia, Serbia, Bulgaria, Romania and Ukraine. Officials said the alkalinity levels in the Marcal River and the River Rába were above the harmless level (i.e. higher than pH8.5). However, no sustained and significant rise in pH levels was reported in the Danube, prompting officials to announce there is no risk of a biological or environmental catastrophe in the river.

The Hungarian government initially estimated the cleanup would take at least a year and cost tens of millions of euros. Prime Minister Orban said the people affected by the spill must be compensated and those responsible for the disaster should bear the financial consequences, not the Hungarian taxpayer. The company responsible for the plant and reservoir, MAL Zrt, has offered its condolences to the families of the bereaved but insists it has done nothing wrong. According to reports, Allianz has confirmed that MAL Zrt has property and liability cover through its Hungarian subsidiary, Allianz Hungaria.

However, Allianz declined to provide further details and MAL Zrt officials have suggested in other reports that the company only has insurance to cover damage to the plant and not the financial costs to the surrounding communities. Both Munich Re and Hannover Re have said they expect their share of any claims to be negligible, according to Reuters News.

Repair work is continuing at the reservoir as a large section of the dam is still showing signs of ruptures. Officials estimates another 500,000 cubic meters of toxic red sludge could spill out if the wall collapses. An investigation is underway to determine what caused the incident. MAL Zrt has come under fierce criticism, with officials suggesting too much industrial waste was contained in the reservoir. The environmental group WWF also claims the reservoir may have been leaking as far back as June. MAL Zrt has said there was no advance sign of the disaster.

Sources: CNN News, Associated Press, Reuters News, Agence France Presse, BBC News, Insurance Day, Business Insurance, BBC Monitoring European

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