Maddington battery site shows why li-ion storage needs its own insurance and liability playbook

A lithium battery recycling yard in Perth's Maddington suburb exploded in March 2025, burning for five hours and sending toxic smoke across surrounding streets. Three months on, the site caught fire a second time. The owner is now on record saying conditions are worse than before the first event.

Reporting by 7NEWS Australia (https://7news.com.au/news/li-ion-energy-sounds-alarm-over-new-threat-months-after-major-maddington-battery-facility-explosion-c-22504450) quotes Li-ion Energy owner Justin Manton saying he has exhausted his funds and is calling on the WA government to step in. More than 80 tonnes of batteries fuelled the original fire. Manton says there are more batteries on site now than were present when that fire started. UWA Centre for Energy director Dongke Zhang has described the ongoing threat as serious enough to kill people.

The public and security conversation following the Maddington fires has focused on reignition risk and site access. There is a less-examined problem underneath both of those: when a facility owner runs out of money, who is actually liable for what happens next, and does anyone have the financial tools in place to cover it?

The liability vacuum that emerges when operators go insolvent

Standard commercial property insurance is structured around recoverable assets. Once a facility is destroyed, underwriters are looking at salvage value, not ongoing hazard management. Lithium battery sites do not fit that model cleanly. The batteries themselves retain chemical energy regardless of whether they are damaged, and damaged cells are often worth less than zero once remediation costs are factored in.

When an operator becomes insolvent or simply runs out of remediation funds, a gap opens. The site still exists. The hazard still exists. But the person with legal responsibility for managing it no longer has the means to do so. That is the situation Maddington has made visible. It is unlikely to be the last time this happens in Australia.

State environmental protection authorities have powers to compel action or step in under contaminated land frameworks, but those pathways are slow and were not designed with thermally unstable battery arrays in mind. The WA government has said it is working on a disposal plan. In the meantime, the batteries remain on site.

What operators with active li-ion facilities should do before they need this

The Maddington situation is an extreme example, but the underlying exposure is not rare. Across Australia, grid-scale battery installations, EV charging infrastructure, and solar storage systems mean that more commercial sites than ever carry significant li-ion inventory. Most have fire suppression plans. Far fewer have a documented liability and financial continuity plan that specifically covers the post-fire period.

Three things worth acting on now, before an incident:

Get a written legal opinion on your post-incident obligations. Many operators assume that notifying emergency services and their insurer closes their liability loop. It does not. Depending on your jurisdiction and the nature of your stored materials, you may carry ongoing environmental and safety obligations for months after a fire is declared contained. Know exactly what those are in writing.

Review your policy for hazardous residue exclusions. Lithium battery fires produce toxic byproducts including hydrogen fluoride. Some commercial property policies exclude remediation costs for chemical residue, even when the fire itself is covered. Check whether your policy covers the clean-up, not just the building.

Model the insolvency scenario explicitly. If your business lost 80 percent of its operating revenue tomorrow, could you still fund the minimum safe management of remaining battery inventory on site? If the answer is no, that is a gap in your risk plan. Some operators address this with a ring-fenced remediation reserve or a bond held in trust. Neither is common practice yet in Australian battery recycling, but the Maddington case makes a reasonable argument that they should be.

Where security fits into the liability picture

Physical security at a financially distressed hazardous site is not just an operational issue. It has direct bearing on liability exposure. If an unauthorised person enters an unstable site and is injured, the question of whether adequate perimeter controls were in place will be central to any subsequent legal action.

XGuard covers exactly these assignments. A compromised industrial site with thermally unstable material on-site requires documented patrol logs, clear escalation protocols to emergency services, and a defensible record that access was controlled to the extent possible given conditions. That documentation matters in an insurance claim and in any regulatory investigation that follows a reignition event.

Pro tip: Ask your insurer directly whether your current policy covers third-party injury claims arising from a post-fire reignition on your property. Many operators assume it does. The answer is not always yes, and finding out after an incident is the wrong time.

The broader signal for the industry

Australia is installing battery storage faster than it is developing the regulatory and financial frameworks to manage what happens when those systems fail. The Maddington site is a visible, ongoing demonstration of that gap. Operators who treat their li-ion liability exposure as equivalent to standard plant and equipment insurance are working from an outdated risk model. The financial and legal architecture needs to catch up with the technology, and the time to audit your own position is before a fire, not after.

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Source: au-7news — 2026-06-29