Spanish authorities are struggling to dispose of five million tyres dumped on a site close to a housing development north of Toledo.

The 90,000 tonnes of tyres that have been dumped there since 2002 cover 117,000 square metres straddling the Madrid and Castilla-La Mancha regional boundaries.

The dump, the largest in Europe, lies 400 metres from the El Quiñon housing development, one of the most notorious of the housing boom. Only about 1,000 of the planned 13,500 units are occupied, rendering it a virtual ghost town.

The local authorities said this week they were putting out a tender in January to find a company with the capacity to shred the mountain of rubber, which poses a serious fire and environmental risk. Environmentalists say that should a fire break out it could not be extinguished with water and would have to be smothered with earth. In the event of a fire, Madrid’s main airport would have to be shut down and an estimated 11,000 homes evacuated, it is claimed.

A fire at the dump couldn’t be extinguished by water, only by earth, and would cause Madrid’s main airport to be shut down, it is said. Photograph: Pablo Blazquez Dominguez/Getty

The company originally tasked with managing the recycling had only four employees and was incapable of coping with work on this scale. The company was fined on various occasions for infringing environmental regulations and in 2009 the owner was jailed for three months for crimes against the environment. Dumping on the site ended in 2011.

The tyres, dumped on the site since 2002, cover 117,000 square metres. The company originally tasked with managing the recycling had only four employees and was incapable of coping with work on this scale. Photograph: Pablo Blazquez Dominguez/Getty

As the local authorities cannot agree on who should take responsibility for the work, once again they are tendering for a company that can shred the rubber. Shredded car tyres can be mixed with asphalt and used to pave roads. Noise levels on such roads are as much as 12 decibels lower than on conventional surfaces.

The El Quiñon development was built without any provision for water or gas supplies, leaving the flats uninhabitable. Supplies have now been connected but the banks, desperate to offload the properties, have slashed the price of a two-bedroom flat from €200,000 to €57,000 (£147,000 to £42,000).

The local mayor was arrested on bribery charges relating to the project but was never tried. The developer has moved its headquarters to Equatorial Guinea.